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Insolvency petitions form part of the regular diet of commercial proceedings seen by the Cayman Island courts. Having been revised as recently as 2013, Cayman Islands company law on the standing of those able to bring winding up proceedings was recently tested at both trial and appeal.
The first instance decision of Justice Mangatal, to strike out a winding up petition presented by certain limited partners of Rhône Holdings LP, a Cayman Islands’ exempted limited partnership (ELP) governed by the Exempted Limited Partnership Law 2014 (ELP Law), was the first time the Grand Court had enforced Section 95(2) of the Cayman Islands Companies Law (2013 Revision).
The Companies Law provides for the dismissal or adjournment of the hearing of a winding up petition “on the ground that the petitioner is contractually bound not to present a petition against the company”. In December 2015, the Cayman Islands Court of Appeal unanimously held that the petition was contrary to an express provision requiring them not to do so, found in the limited partnership agreement, and refused to grant the petitioners leave to appeal out of time on the basis that the appeal had no reasonable prospect of success.
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Wound Up, or Not? Rhône Holdings in the Cayman Courts
This article was first published in CDR, Volume 7, Issue 4, July-August 2016