Vol 19 (2022) - Issue 3

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Transaction Avoidance in the Cayman Islands Insolvency Context: Dispositions at an Undervalue – Section 146 of the Companies Act

Synopsis
In the Cayman Islands, as elsewhere in common law jurisdictions, there are transaction avoidance provisions enshrined in statute that are designed to preserve, so far as possible, an insolvent debtor's available assets, so that they may be distributed to creditors fairly on an equal footing.
Those provisions are to be found in the Cayman Islands Companies Act (the 'Companies Act'). They concern voidable preferences (under Section 145), dispositions at an undervalue (under Section 146), and fraudulent trading (under Section 147).
In Volume 18 of this publication, the authors analysed the operation of Section 145 and the consequences of its application.
This article considers the avoidance of dispositions at an undervalue under Section 146, with a particular focus on the origins of the provision and how the expression 'intent to defraud' is likely to be construed.