May 11, 2021

New Cayman insolvency laws: liquidator fees and liquidation committee

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From Harneys

Brand new 2018 amendments to the Companies Winding Up Rules and the Insolvency Practitioner Regulations make important modern improvements to liquidators’ remuneration and the composition of liquidation committees.

Liquidators have been and continue to be required to seek court approval of their remuneration. Two such methods for determining liquidators’ remuneration are: (1) a percentage of the amount distributed to creditors and members of the company; (2) a percentage of the amount realized upon the sale of the company’s assets. In instances where liquidators are to be remunerated on either of these two bases, the new amendments require that the liquidators must seek court approval either 6 months from the date that the liquidation committee is established or 9 months form the commencement of the liquidation, whichever is later. This requirement establishes a definite time period for liquidators’ remuneration to be addressed and provides all parties with crucial information early on that may impact availability of resources.

The second significant new change is with regard to the composition of the liquidation committee with new rules restricting members to one role on the committee. Specifically, a member may not act as both a creditor and a contributory, as representative of more than one committee-member or as a member of the committee and representative of another committee. Creditors, companies and other stakeholders can be reassured that there are safeguards as to conflicts of interest on the committee and that the committee is fairly constituted. The new change also establishes an equal playing field for all stakeholders alike.

With the additional oversight from the Court and safeguards in place, these changes will drive further creditor action against insolvent companies creating better efficiency in the global economy.

Please contact JAMES NOBLE, JACKIE MOODY or NICK HOFFMAN for more information at web link below.

SOURCE: http://harneysoffshorelitigation.com/new-cayman-insolvency-laws/

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