Vol 15 (2018) - Issue 6

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The Cayman Restructuring Toolkit: Exploring the Flexible Restructuring Options on Offer in the Cayman Islands

Synopsis
The Cayman Islands provisional liquidation regime has proven to be an extremely useful and flexible tool to assist with complex financial restructurings. In circumstances where a Cayman Islands company is insolvent or potentially insolvent, its board of directors must have regard to creditors’ interests as a whole when discharging their fiduciary duties and ideally be engaging with the company’s creditors in order to try and agree upon a consensual restructuring solution. However, such a consensual out-of-court process would typically require unanimous support (or acquiescence) from all of the company’s creditors and therefore the company’s board of directors may wish to consider alternative options to mitigate the risk that a disgruntled creditor may seek to disrupt any restructuring process by commencing proceedings against the company. This article focuses on the provisional liquidation regime in the Cayman Islands and how it can be a useful tool for companies who are facing an imminent debt crisis.