Sep 2026
Recent decisions by the Cayman Islands courts have refined how liquidations begin, who may bring them, and how far officeholders’ powers extend.
Romane Duncan, Senior Associate at Conyers, was invited to join a panel to examine these developments at a technical webinar hosted by the IWIRC Cayman Islands Network. Together, the panel considered what the latest Cayman insolvency case law means for funds, creditors, directors and insolvency practitioners.
Key Takeaways
1. Where two routes to liquidation compete, the Court will prefer the more efficient one
In Re Atlas Capital Markets LLC [2026] CIGC (FSD), the Grand Court faced two competing applications concerning a Cayman investment fund: a just and equitable winding-up petition brought by an ousted shareholder, and a later supervision petition under section 131(b) of the Companies Act (2025 Revision) filed by the joint voluntary liquidators. The Court preferred the supervision route. It found no substantive difference in outcome between the two, but identified three practical drawbacks to the just and equitable petition:
- a standing risk for the petitioning shareholder;
- duplication of costs across parallel processes; and
- delay to the prompt investigation the incoming officeholders needed to undertake.
2. Appointment at the instigation of one faction does not, by itself, compromise liquidator independence
The Court in Re Atlas also addressed liquidator independence, applying the three-stage objective framework established in Re Global Fidelity Bank Ltd [2021] 2 CILR 361. It rejected a challenge to the proposed liquidators’ independence, holding that the mere fact of their appointment following a resolution instigated by one faction did not impair it. Once appointed, liquidators are officers of the court and owe duties to all stakeholders. Perception matters, but a challenge must be bona fide and grounded in actual evidence rather than assertion.
3. Filing a proof of debt submits a foreign creditor to the Cayman court’s jurisdiction
Conway v Air Arabia [2026] CICA (CIV) 10, arising from the Abraaj liquidation, confirms that a foreign creditor who files a proof of debt implicitly submits to the Cayman court’s jurisdiction for all questions in the insolvency, including fraudulent trading claims. The decision is a helpful one for officeholders seeking to pursue claims against overseas defendants, and a point of consideration for foreign creditors weighing whether to participate in a Cayman liquidation.
4. Contingent creditors must still establish standing to petition
Re PetroSaudi International [2026] CICA (Civ) 14 clarifies the limits of the winding-up jurisdiction. A contingent creditor must show an existing legal obligation capable of giving rise to a future enforceable debt. The need for an investigation cannot be deployed to circumvent the requirement to establish standing.
5. The Court continues to police the outer limits of officeholders’ powers
The panel also surveyed recent developments on the role of officeholders, including Peakwave Investment Management (scope of JPL powers), Cowan & Pearson v Buck (service out against foreign former directors), and China Gem Fund IX (in which the Court observed that cross-border recognition requests should seek only those powers genuinely required, lest they become a “trespass upon comity”), each of which reinforces that powers will be granted only so far as they are genuinely needed.
Taken together, these decisions show the Cayman Islands courts balancing efficient, well-supervised liquidations against careful scrutiny of standing, independence and the proper scope of officeholders’ powers. For funds, creditors, directors and insolvency practitioners, the practical message is to take care when deciding on the best path and to seek relief that is justified in the circumstances, as opposed to seeking broad powers without cogent evidence.