Applications to remove Official Liquidators: A high bar, rarely met

Walkers successfully acted for the Joint Official Liquidators of BTU Power Company (In Official Liquidation) (the "JOLs") in respect of an application seeking the removal of the JOLs from office pursuant to section 107 of the Companies Law (2018 Revision) (the "Companies Law"). In a judgment handed down on 14 February 2019, the Grand Court of the Cayman Islands categorically rejected the application by Mr A (the "Applicant") seeking the removal of Mr Penner and Mr Sybersma, both partners in Deloitte & Touche, in favour of alternate JOLs proposed by the Applicant.

In addition to determining that the Applicant lacked the requisite standing to bring the Removal Application on the basis that he had no legitimate interest in the relief sought and was therefore not a proper person to seek to invoke the jurisdiction under section 107 of the Companies Law, the judgment provides a useful overview of the common law authorities applicable to applications to remove an official liquidator and reaffirms the high bar that an applicant will be required to meet in order to satisfy the Court that the removal of incumbent official liquidators will confer any discernible benefit on a company's stakeholders.

Based on his analysis of the evidence, Parker, J held that none of the allegations made against the JOLs in the Applicant's evidence amounted to anything that could justify the removal of official liquidators under section 107 of the Companies Law and characterised the Removal Application as constituting a clear abuse of process, warranting an order for indemnity costs against the Applicant.