Judgment on Declaratory Relief in Cayman Islands Insolvent Liquidation Proceedings

A recent decision of Kawaley J sitting in the Grand Court of the Cayman Islands (the “Grand Court”) has provided helpful clarification on what he described as a “legally significant” and “important jurisdictional point”. The question was one of the Grand Court’s jurisdiction to grant declaratory relief in official liquidation proceedings in circumstances where there is no express provision in the Companies Act (as amended) (the “Companies Act”) or the Companies Winding Up Rules (as amended) (the “CWR”) giving the Grand Court jurisdiction to make declarations in insolvent liquidation proceedings. Kawaley J held that it does have the jurisdiction to do so whether that be pursuant to the Grand Court Act, impliedly under the Companies Act jurisdiction to control the exercise of a liquidator’s powers, pursuant to its inherent jurisdiction to fill a lacuna in the existing procedural framework, or to make good its own prior order in the liquidation proceedings.


The Cayman Islands parent company (the “Company”) has subsidiaries incorporated across the globe. It was initially placed into provisional liquidation in order to effect a restructuring which later continued on an insolvent basis when the Company was placed into official liquidation and joint official liquidators (“JOLs”) were appointed. This decision arose because the JOLs required their powers in the official liquidation to be formally confirmed by the Grand Court in order to obtain regulatory approval in a jurisdiction which is unfamiliar with Cayman Islands insolvency law to make good a commercial agreement connected to a disposition of the Company’s assets.


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