Investors' Claims for Unpaid Redemption Proceeds in the Winding Up of Cayman Islands Investment Funds

A recent judgment of the Cayman Islands Court of Appeal (Michael Pearson (in his capacity as Additional Liquidator of Herald Fund SPC (in Official Liquidation)) v Primeo Fund (in Official Liquidation), unreported, 19 July 2016) has provided a degree of certainty for investors and insolvency practitioners alike with respect to the priority to be afforded to investors' claims for unpaid redemption proceeds in the winding up of Cayman Islands investment funds. The judgment has, however, in the absence of a coherent interpretation of section 37(7)(a) of the Companies Law, given rise to some uncertainty with respect to the enforceability of such claims, with enforceability now seemingly entirely dependent on the particular terms of redemption contained in individual articles of association. This decision is now on appeal to the ultimate appellate Court of the Cayman Islands, the Judicial Committee of the Privy Council.

 

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