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Winding Up an Exempted Limited Partnership: How Long Will Cayman Islands Law Remain in a Judicial State of Flux?

In a recent first-instance judgment handed down by Kawaley J on 21 April 2022 in The Matter of Formation Group (Cayman) Fund I LP, the Grand Court of the Cayman Islands has held that a winding up petition may be presented directly against an Exempted Limited Partnership (“ELP”), as opposed to just against its General Partner.

In so doing, Kawaley J has disagreed with the October 2021 first-instance decision of Parker J in The Matter of Padma Fund, LP, where the Grand Court had held that the Court does not have the jurisdiction to make a compulsory winding up order against an ELP on a creditor’s petition, and that the remedy of the creditor was to commence proceedings against the General Partner only

As matters currently stand, therefore, there are two divergent first-instance decisions concerning the following key issues under Cayman Islands law:

  1. Who is the proper respondent to a winding-up petition in respect of an ELP? and;
  2. To what extent does the Cayman Court have the jurisdiction to order the winding up of an ELP?

The resolution of these debatable legal issues is not only of legal or academic interest: since these issues also have significant commercial implications.

ELPs are one of the most popular vehicles of choice for investment funds (particularly private equity funds) domiciled in the Cayman Islands. There is also a significant fund finance market, whereby banks and other institutional lenders are willing to lend substantial sums of money to ELPs, often on standard terms providing for limited rights of recourse so far as General Partners are concerned.

The final and binding resolution of these issues, therefore, is of substantial commercial importance both to investors, lenders, creditors, and managers of all Cayman Islands’ ELP funds.


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Winding Up an Exempted Limited Partnership: How Long Will Cayman Islands Law Remain in a Judicial State of Flux?


Alex Potts QC
Partner, Head of Cayman Islands Litigation & Restructuring

Cayman Islands   +1 345 814 7394

Alecia Johns

Cayman Islands   +1 345 814 7255


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