CAYMAN ISLANDS Trends and Developments Contributed by: Matthew Dors, Natascha Steiner-Smith, Annalisa Shibli and Kirsten Bailey, Collas Crill
ment that would put off judgment day”. At the hearing, the defendant then abandoned most of the grounds upon which it had relied in making the opposition sum - mons. In the judgment, the judge described the opposi - tion summons filed by the defendant as ill-founded and misconceived, and noted that the defendant’s conduct was improper and unreasonable to a high degree and therefore supported the imposition of indemnity costs. Safeguarding target assets Practically speaking, obtaining the right to enforce a foreign judgment or arbitral award is only the first step in recovering any sums due to the applicant/judgment creditor. The enforcement order has the effect of cre - ating a debt or liability in favour of the plaintiff as a matter of Cayman Islands law but does not guarantee that payment of the debt will actually be made. It is often the case that judgment debtors are either unwilling or unable to satisfy the judgment debt. As a result, additional enforcement steps are often required to secure the relevant assets, which might include injunctive relief and/or commencing insolvency pro - ceedings. The Grand Court continues to illustrate its willingness to assist judgment creditors in furthering the enforcement of foreign judgments and awards. In the Matter of Ovaskainen v Ovaskainen (Unreported, 21 June 2023) Here the Grand Court granted a freezing order over assets located in the Cayman Islands, in support of a writ to enforce a Swiss judgment. The order was made in circumstances where there was evidence to suggest that the defendant was taking steps to avoid satisfying his obligations under the judgment. The order prohibited the disposal of assets up to the value of the sum specified in the Swiss judgment, as well as the disposal of property in the Cayman Islands registered in the defendant’s name. Importantly, this injunctive relief was granted before the enforcement proceedings were determined. A suite of insolvency regime options is also available to judgment creditors, including official liquidation, the appointment of receivers and provisional liquidation. In the recent Grand Court decision of Kingkey Finan- cial International (Holdings) Limited (Unreported, 19 April 2024), the Grand Court grappled with its remain -
ing jurisdiction to appoint provisional liquidators (PLs) following the introduction of the new restructuring officer (RO) regime in late 2022. In this decision, the Grand Court was presented with a winding-up petition and a summons for the appoint - ment of light-touch PLs, unusually presented by King - key itself. Kingkey had significant short-term liquidity issues but attempts to raise capital had been hindered by one of its directors, Mr Chen. A special committee of the independent non-executive directors concluded that Kingkey was or would soon become insolvent given the lack of secured alternative funding. On its face, the company seemed the perfect candi - date for the appointment of ROs; however, it (acting by the special committee) instead sought the appoint - ment of PLs. This was done on the basis that the RO jurisdiction inherently left some power in the hands of the board, which would risk Mr Chen once again interfering with any potential restructuring. The Grand Court agreed to appoint light-touch PLs to create and supervise a restructuring, since the debtor-in-posses - sion model of the RO regime was unsuitable given Mr Chen’s actions and the ongoing disputes between members of the board as a result. Although this decision was focused on taking the necessary steps to enable an injection of assets into the company, rather than preventing the dissipation of assets, it reflects the Grand Court’s ongoing com - mitment to value preservation and safeguarding the interests of creditors and, where appropriate, share - holders. As such, in circumstances where a Cayman debtor has valuable assets that can be targeted in enforce - ment proceedings, the Grand Court has the full range of insolvency tools available to preserve the value of these assets. The Grand Court will not hesitate to take steps to stamp out debtor misconduct that risks the material destruction of value. Conclusion The Grand Court continues to promote the efficient enforcement of foreign judgments, but judgment cred - itors should be cognisant of the fact that enforcement proceedings can be costly and protracted if contest -
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