Unresolved Questions From Primeo

This article continues Ogier's discussion in relation to the latest Cayman Islands Court of Appeal decision in Primeo and outlines the issues facing investors in relation to the priority of payments in Cayman Islands funds ( read our previous article here).

Recap

Primeo, an investor in a Bernie Madoff feeder fund called Herald, redeemed out of Herald in December 2008. Primeo's redemption request was accepted but, before the redemption proceeds were paid to Primeo, Bernie Madoff confessed his fraud and the directors of Herald suspended payments of redemptions. Herald later went into liquidation.

There is a statutorily imposed order of priority of payments whenever a Cayman Islands fund is put into liquidation and, in order to be paid ahead of other investors in Herald, Primeo argued that they should rank alongside unsecured outside creditors of the fund.