CAYMAN ISLANDS Law and Practice Contributed by: Agnes Molnar, Jason Ta, Paul Walters and Gemma Walters, Travers Thorp Alberga
its obligations to a service provider, but will be required to comply with the relevant principles in the Guidance Notes. Various service providers to the SPEs may also be considered as carrying on relevant financial business under the POCA. 5. Synthetic Securitisation 5.1 Synthetic Securitisation Regulation and Structure There are no particular rules of the laws of the Cayman Islands that specifically cover synthetic securitisation. 6. Structurally Embedded Laws of General Application 6.1 Insolvency Laws There are a number of statutory provisions that may render a transaction voidable and therefore affect the clawback analysis under a securitisa - tion. Preferences and transactions at underval - ue are potentially voidable upon application by the liquidator. A liquidator may also apply for a declaration if, in the course of the winding up of a company, it appears that any business of the company has been carried on with intent to defraud creditors or for any other fraudulent pur - pose. See 6.5 Bankruptcy-Remote SPE . SPE Each of the secured parties will be required to agree not to institute any bankruptcy or similar proceedings against the SPE (under Cayman Islands law or similar laws of any jurisdiction) until payment in full of all debt securities and the expiration of an applicable period.
Non-petition provisions are recognised under the laws of the Cayman Islands. Section 95(2) of the Companies Act provides that the court shall dismiss a winding-up petition or adjourn the hearing of a winding-up petition on the ground that a petitioner is contractually bound not to present a winding-up petition against an SPE. In order to benefit from these statutory protections, non-petition clauses require clear, precise and unequivocal drafting. A contractual agreement in respect of non-petition is likely to be enforceable in the Cayman Islands unless it breaches public policy. As the petition for appointment of a com - pany restructuring officer is commenced by a company (via its directors) itself, if that company was restricted under a contract from petitioning for such a company restructuring officer itself, that could be upheld. Secured Creditors As a matter of law in the Cayman Islands, not - withstanding that a winding-up order has been made, a creditor who has security over the whole or part of the assets of a company is entitled to enforce that person’s security without the leave of a Cayman Islands court and without reference to the applicable liquidator. 6.2 SPEs Some practical considerations relating to an SPE are set out below. Incorporation Generally, a certificate of incorporation can be provided within 24 hours if ordered on an expedited basis. There are no minimum capital requirements for a securitisation SPE under the Companies Act, although there must be at least one share in issue at all times. Cayman Islands- exempted limited companies are often incorpo - rated with an authorised capital of USD50,000 (which is the maximum authorised capital for
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