Guidance from the Grand Court of the Cayman Islands: The Role of Liquidation Committees in the Sanction of Liquidators' Costs and Expenses

Following a recent hearing, the Grand Court of the Cayman Islands (the "Grand Court") has handed down a notable judgment (the "Judgment") approving the remuneration of the Principal Liquidators of Herald Fund SPC (In Official Liquidation) ("Herald") incurred during a six-month period, the entire amount of which had been opposed by Herald's Liquidation Committee.

Although remuneration applications made by Cayman Islands insolvency office holders are a statutory requirement and therefore commonplace in the Grand Court, written decisions on them are handed down infrequently, and the Judgment provides useful guidance on "…the broader question of the extent to which Official Liquidators are required to seek the approval or tacit support of the Liquidation Committee when defining the scope of their operational functions and, consequently, incurring liquidation costs and expenses." Kawaley J's Judgment sets out an instructive exposition of the principles underpinning contested remuneration applications, and will therefore be of interest to insolvency practitioners and their advisors.

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