The Cayman Islands is home to one of the world’s leading financial centres. Its tax neutral status, stable government, and sophisticated legal system, and the flexibility of its Companies Act make the jurisdiction attractive to investors. Most offshore companies in the Cayman islands are incorporated for holding or international training purposes, as opposed to carrying out business directly in the Cayman Islands. As such, the need for significant measures in the Cayman islands to address business concerns as a result of COVID-19 has been less pressing than elsewhere in the world.
The Cayman Islands continue to be an attractive restructuring jurisdiction. The courts and the dedicated Financial Services Division have significant experience in managing complex debt restructurings. Such debt restructurings in the Cayman Islands often involve cross-border issues and require recognition in the jurisdictions such as the United States and Hong Kong, and they often necessitate co-operation between the various jurisdictions, both at a practitioner and judicial level.
Restructuring work is certainly on the rise within the jurisdiction. Businesses continue to face great pressure given the breakdown of international supply chains, disruptions to manufacturing, cash flow issues, and labour shortages. Practitioners are therefore seeing otherwise viable companies forced to restructure liabilities and business structures to try to salvage ongoing trading and keep ahead of the looming risk of insolvency.
This article discusses the various business sectors that practitioners have noted as being particularly impacted by COVID-19, the modes of restructuring in the Cayman Islands and how they are being used, proposed legislative reform, and the impact of COVID-19 on court administration in the jurisdiction.
This article was originally published in the July/August 2021 edition of Turnaround Management Association’s Journal of Corporate Recovery.
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The Impact of COVID-19 on Cayman Islands Restructurings