No Claim, No Injunction: What Does a Limited Partner Actually Own?
What equitable proprietary interest, if any, does a limited partner hold in the assets of a Cayman Islands exempted limited partnership, and is that interest is sufficient to ground a proprietary injunction? These questions lie at the heart of Parker J’s recent judgment in the matter of Charitable DAF HoldCo, Ltd (in Official Liquidation), in which the Grand Court refused proprietary injunctive relief sought by joint official liquidators against former directors and associated entities. The judgment holds that the Company, as a limited partner in a Cayman ELP, had no equitable proprietary interest in the Fund’s underlying assets of the quality required to found the relief sought. While the court did not exclude the possibility of an LP having proprietary rights in an ELP’s assets, it held that on the particular facts of the case such rights were excluded
Introduction
When can a litigant obtain a proprietary injunction, and what proprietary interest is required to justify such relief? These questions were squarely before Parker J in In the Matter of Charitable DAF HoldCo, Ltd (in Official Liquidation) [2026] CIGC (FSD) 9, a judgment delivered on 10 February 2026. The case arose from a significant and contested restructuring of a Cayman Islands charitable fund structure, in which the joint official liquidators (JOLs) of the Company alleged that former directors had stripped the Company of its only asset, a 99% limited partnership interest in Charitable DAF Fund, LP (the Fund), at a gross undervalue, and sought sweeping proprietary injunctive relief to preserve that asset pending trial.
The judgment is significant for practitioners in a number of respects. First, it provides a clear and principled analysis of when a proprietary injunction will lie and what kind of claim is needed to support one. Second, it contains a careful examination of the nature of a limited partner’s interest in a Cayman Islands exempted limited partnership (ELP), particularly one structured for charitable and tax purposes rather than commercial investment. Third, it engages critically with a body of recent English authority, including Koza Ltd v Koza Altin Isletmeleri AS [2020] EWCA Civ 1018, Gill and Kaur [2025] EWHC 156 (Comm) and Bourlakova [2025] EWHC 1792 (Ch), and declines to apply them in the way urged by the applicant.
Factual Background
The Fund was a Cayman Islands exempted limited partnership established in 2011, with the purpose of investing and managing assets for the ultimate benefit of certain US charitable organisations (the Charities). The Company was the Fund’s sole limited partner, holding a 99% partnership interest. The structure was designed to serve as an offshore ‘corporate blocker’ for US tax purposes: by interposing the Company between the Fund and the Charities’ supporting organisations, distributions could be made in a tax-efficient manner and the Charities insulated from unrelated business taxable income.
The Company’s share capital was divided between Participating Shares (held by four US non-profit companies, the ‘Supporting Organisations’, which supported the Charities) and Management Shares (held by Mr Mark Patrick, the first defendant and sole director). Mr Patrick was described as occupying a ‘Control Position’ as he was sole director and Management Shareholder of the Company, and sole director and shareholder of the Fund’s general partner. In April 2021, he also appointed Mr Paul Murphy as a fellow director.
From late 2024, the Supporting Organisations began raising concerns about rapidly escalating fees and expenses. In response to the Supporting Organisations’ concerns, Mr Patrick and Mr Murphy undertook a series of transactions between December 2024 and March 2025, without informing the Supporting Organisations or the Charities. In brief: the Company’s limited partnership interest was transferred to a newly incorporated Delaware LLC, CDMCFAD, LLC (CDM), of which Mr Patrick was sole member; 318 new Participating Shares were issued to DFW Charitable Foundation (DFW), a newly incorporated Delaware non-profit whose sole member was also Mr Patrick, diluting the Supporting Organisations to below 50%; and CDM subsequently redeemed the Company’s membership interest for US$1,637,192, a sum the Directors justified by reference to three independent valuations. The JOLs contended that the Fund’s net asset value at the relevant time was approximately US$269 million, making the transaction a gross undervalue.
The JOLs were appointed on 6 May 2025. Following a contested application in July 2025, interim undertakings were agreed. By December 2025, the JOLs sought full proprietary injunctive relief, restraining each defendant from dealing with the Fund’s assets, along with extensive ancillary disclosure.
The Decision
What is an Equitable Proprietary Interest, and Who Holds One in a Cayman ELP?
A proprietary injunction is a form of equitable relief by which the court protects a claimant’s asserted proprietary interest in a specific, ascertained asset pending trial. Unlike a freezing order, which restrains a defendant from dissipating their own assets and requires evidence of a risk of dissipation, a proprietary injunction is grounded in the claimant’s own claim to the asset itself. The claimant must assert a legal or equitable proprietary interest in the property sought to be preserved. A purely personal claim, however strong, will not suffice.
An equitable proprietary interest arises most classically in the trust context. Where property is held on trust, the trustee holds legal title but the beneficiary holds an equitable interest in the trust assets: an interest that is enforceable not merely against the trustee personally but in respect of the property itself, and which can in appropriate circumstances be traced into substitute assets. It is this quality of the beneficiary’s interest, its proprietary, in rem character, that has historically grounded applications for proprietary injunctive relief to preserve trust assets.
In the Cayman ELP context, the starting point is s.16(1) of the ELP Act, which is headed “Property” and provides that all rights and property of an ELP shall be held by the general partner “upon trust as an asset of the exempted limited partnership” in accordance with the terms of the partnership agreement. On the face of the statute, this imports a declaration of trust into every ELP: on a plain reading of the statute the general partner holds legal title as trustee, and the limited partners hold equitable interests as beneficiaries. Cayman courts have consistently used the vocabulary of trusts to describe this relationship. In Neoma Manager (Mauritius) Ltd v Abraaj ABOF IV SPV Ltd, Parker J described the GP as holding partnership assets “on a statutory trust” and as acting “as trustee” for the limited partners, with the limited partners characterised as the economic owners of the partnership whose interests the GP manages on their behalf. The Cayman Islands Court of Appeal resorted to a similar characterisation in Abraaj General Partner VIII Ltd v Abraaj ABOF IV SPV Ltd, describing the GP as owing fiduciary duties as “partner, agent and trustee.” This raises an important question: if the GP is trustee and the LPs are beneficiaries of a statutory trust, do the limited partners hold an equitable proprietary interest in the partnership assets capable of grounding a proprietary injunction?
The answer is not straightforward, and the present judgment does not fully resolve it. What Parker J does make clear is that even if one accepts the trust analysis, the nature and quality of the particular LP’s interest must still be examined. Not all equitable interests are equal: a fixed beneficiary with an entrenched, ascertained entitlement stands in a very different position from a discretionary beneficiary whose interest is entirely at the trustees’ discretion . It is to that question that the Court’s analysis turned.
The particular structure of the Fund reinforced this conclusion. Under the Second Amended and Restated Exempted Limited Partnership Agreement, distributions were entirely at the general partner’s discretion. The Company’s interest as limited partner was not an entitlement to receive distributions for its own account, but merely a right to be considered for discretionary charitable distributions for the benefit of the Indirect Charitable Owners (i.e. the qualifying Charities). The general partner could at any time and for any reason require the withdrawal of a limited partner’s interest. The Company had no entrenched rights. One of the more analytically striking features of the judgment is the analogy Parker J drew with the position of a beneficiary under a discretionary trust. Just as a discretionary trust beneficiary may be said to have a ‘proprietary interest’ in the trust assets in some loose sense, in that their interests fall to be considered by trustees, that interest (so he said) is not proprietary in the sense required to ground a proprietary injunction. The beneficiary’s entitlement is to have the trustees exercise their discretion in good faith, not to any specific asset. The Court found that the Company’s position as limited partner was analogous to that of a discretionary beneficiary with a terminable interest. The judge acknowledged that a limited partner may be described as having a ‘proprietary interest’ in partnership assets as a matter of terminology, and that Mr Ayres KC sought to rely on this concept. However, Parker J held that the limited partnership interest in this particular structure was not a proprietary interest in the assets themselves, but merely the right to be considered for potential distributions, which the Company then passed on to the Charities. The substance of the interest, not its label, was determinative. This is a legally elegant move: it does not deny that limited partners can in principle have interests that attract some form of protection, but it insists that the nature and quality of the interest must be examined carefully before proprietary injunctive relief can follow.
The Court also had regard to the Company’s Mission Statement and its purpose as a tax blocker and conduit for charitable distributions, finding that this was inconsistent with any claim to legal or beneficial ownership of Fund assets. Evidence that other charities had declined to accept a gift of Participating Shares, on the basis that the shares conferred only discretionary dividends, no liquidation rights, and were susceptible to dilution, further supported the view that the Company’s interest was of limited economic value.
Quaere whether it might have been argued that even though the limited partner could not itself obtain material benefits from the ELP, it held rights which it would have had (had it been able so to benefit) on trust for the charitable institutions who did stand materially to benefit from the distributions. Put another way, might it not have been contended that the limited partner was a kind of enforcer not unlike the beneficiary of a discretionary will trust who, in turn, is a trustee of his beneficial receipts for the benefit of a third person under a secret trust? Indeed, it is not altogether clear how thoroughgoing the judge’s analogy to the rights of a discretionary beneficiary really was; this is because a discretionary beneficiary (in the true sense) may, like the object of a dispositive mere power, sue the trustee to restore value lost to the trust fund in consequence of a breach of trust (e.g., Lewin on Trusts, 20th Ed., 47-073 citing Schmidt v Rosewood Trust Ltd [2003] 2 A.C. 709). In other words, the rights of such a potential beneficiary exceed simply the mere possibility of benefit and prima facie include the right to obtain a proprietary injunction for the benefit of the trust fund. This position is well-established and uncontroversial.[1]
The English Authorities: Koza, Gill and Kaur, and Bourlakova Distinguished
The Company’s counsel, placed considerable reliance on three English authorities in support of the proposition that a direct proprietary claim to the assets themselves is not required for a proprietary injunction. Parker J considered each in turn and was not persuaded.
Koza: In Koza, the English Court of Appeal held that a parent company had a proprietary interest in preserving the value of a subsidiary’s assets because the shareholding itself was a species of property, and that jurisdiction existed under s.37 of the Senior Courts Act 1981 to protect such an interest. However, Parker J observed that Koza was primarily a freezing order (Mareva) case, not a proprietary injunction case, and that Popplewell LJ’s reasoning turned on the specific relationship between a parent and its subsidiary and the effect of the subsidiary’s dealings on the value of the parent’s shareholding. Those facts were materially different from the position of the Company, which was a limited partner, not a shareholder, and had no proprietary claim to the partnership assets. The Court therefore found that Koza did not assist the applicant.
Gill and Kaur: In this case, Bryan J, purportedly applying Koza, stated that a claimant does not need to have a direct proprietary claim to the assets themselves in order to obtain a proprietary injunction. Parker J declined to follow this proposition. He noted that the respondents in that case were unrepresented, the court heard no opposition, and the remark was made without the benefit of contrary argument. It was therefore of limited persuasive value and was inconsistent with the established jurisprudence requiring a proprietary claim to the assets themselves.
Bourlakova: This case was a proprietary injunction case in which Smith J, relying on Koza, had granted an injunction restraining a company from dealing with assets without requiring a direct proprietary claim. Parker J respectfully disagreed with this reading of Koza. In Parker J’s view, Popplewell LJ’s judgment concerned the freezing order jurisdiction, which was distinct from the proprietary injunction jurisdiction. A freezing order requires a real risk of dissipation and may include ordinary course of business exceptions; a proprietary injunction, by contrast, requires a claim to ownership of the specific asset and does not ordinarily allow such exceptions. Bourlakova was in any event distinguishable on the facts: it concerned a shareholder seeking to protect the value of a company, not a limited partner seeking to assert ownership over partnership assets.
Lakeshore – The Cayman Position: Parker J also applied the recent Cayman decision in Lakeshore Biopharma Co Ltd [2025] CIGC (FSD) 24, in which Ramsay-Hale CJ had refused a proprietary injunction sought by a displaced shareholder on the basis that shareholders have no proprietary interest in a company’s assets. The Court accepted this reasoning and applied it by analogy to the Company’s position as a limited partner: just as shareholders cannot assert a proprietary claim to corporate assets, a limited partner cannot assert ownership of partnership assets held on trust by the general partner. A proprietary claim requires the claimant to assert a legal or beneficial interest in a specific, ascertained asset. No such claim was available here.
Remuneration Claims and Other Individual Defendants
The Court also dismissed the proprietary claims brought against Mr Patrick and Mr Murphy personally in respect of their remuneration. Parker J found that the payments to the directors had not come from Company funds. They were paid by other entities within the structure, and so no proprietary tracing claim arose against the Company’s own assets. Even if remuneration levels were arguably excessive, any claim was personal rather than proprietary in nature, and damages would be an adequate remedy. The injunction sought against Mr Murphy was described as particularly difficult to justify: he held no interest in the Fund and no pleaded proprietary claim was made against any identifiable asset he held.
Balance of Convenience and Cross-Undertaking
Even if the proprietary claims had been made out, Parker J concluded that the balance of convenience would still have favoured refusing the injunction. The relief sought would have the effect of ‘locking down’ the Fund’s charitable activities and transferring operational control to the JOLs, an outcome the Court regarded as unjustified at an interlocutory stage. The evidence did not establish any real risk that the assets would be adversely dealt with pending trial, particularly given the existing undertakings and the Texas Rule 11 Agreement.
The Court also identified the absence of a properly fortified cross-undertaking as a compelling reason to refuse relief. The default position requires any applicant for an interim injunction to provide a cross-undertaking in damages. Here, the JOLs themselves offered no cross-undertaking; instead, they proposed that the funding entity, Crossvine Litigation Funding LLC, would provide it. Parker J found on the available evidence that Crossvine, whose backers included a party with an outstanding judgment against him of more than US$1.2 billion, was unlikely to be good for the money if the injunction were wrongly granted. The estimated potential damage to the Fund if the injunction were granted was in the region of US$127 million, and the Court found no fortification offered. This was a powerful factor against granting relief.
SERIOUS ISSUE TO BE TRIED ON THE MERITS
Notably, the Court did find that there was a serious issue to be tried as to whether the directors had acted in breach of fiduciary duty in undertaking the restructuring. The allegation that they stripped the Company of its only asset to seize control and enrich themselves, without the knowledge of the Supporting Organisations, was described as a case the directors needed to answer at trial. That finding, however, did not affect the outcome on the injunction application. The Company’s interest was not proprietary, had been reimbursed (at the valuations supported by three independent firms), and any loss could be compensated by an award of damages.
ANALYSIS AND COMMENTARY
The judgment repays careful reading. Its most significant contribution is to the law of equitable proprietary interests in the Cayman ELP context, a question with practical consequences that extend well beyond charitable fund structures.
First, and most fundamentally, the judgment engages with the question of what kind of interest a limited partner holds in a Cayman ELP, and whether (on the facts of the particular case) that interest is equitable and proprietary in the sense required to ground a proprietary injunction even though it cannot be said to reach a concluded view on that point. The answer depends at least on the nature and quality of the particular LP’s interest, not the label attached to it.
The discretionary trust analogy Parker J deployed at paragraphs 137 to 140 does not deny that a limited partner can have interests worthy of protection. It simply insists on examining what those interests actually are. A discretionary trust beneficiary has rights: to have the trustee exercise its discretion properly, to seek court intervention for breach of trust, to trace misapplied assets. The Company’s position as LP was directly analogous. What remains open, and what this judgment does not resolve, is the position of a limited partner with entrenched economic rights in a conventional commercial ELP: a fixed interest in the fund’s assets, a defined entitlement on winding-up, rights that cannot be extinguished at the GP’s will. Whether such an LP holds an equitable proprietary interest capable of grounding a proprietary injunction is an open question in Cayman law. Future litigants may find that the argument, properly framed, has real force.
Secondly, the Court’s treatment of the English authorities is intereseting. Parker J drew a clear line between the freezing order jurisdiction (which can extend to assets over which the claimant asserts an indirect or consequential interest, such as a parent’s interest in preserving a subsidiary’s value) and the proprietary injunction jurisdiction (which requires an assertion of legal or beneficial ownership of the specific asset sought to be preserved). He respectfully declined to follow Gill and Kaur and Bourlakova to the extent they were said to extend the proprietary injunction jurisdiction to cases where no direct proprietary claim existed. This is a useful corrective in the Cayman context, and aligns with the reasoning in Lakeshore. The Court’s message is clear: a claimant who cannot assert a proprietary claim to the specific asset should seek a freezing order instead, which carries an attendant risk-of-dissipation requirement, rather than attempt to dress up the relief as proprietary.
Thirdly, the case is a timely reminder of the importance of the cross-undertaking in damages, and of fortification where the applicant’s ability to satisfy a cross-undertaking is doubtful. The Court found that an intelligent estimate of the potential loss to the Fund if the injunction were wrongly granted ran to approximately US$127 million. Where the funding entity’s financial standing is uncertain, applicants should be prepared to demonstrate, with evidence, that the cross-undertaking is worth the paper it is written on, or to propose alternative fortification. Failure to do so may prove fatal to the application.
Fourthly, and perhaps most practically: the judgment illustrates that a finding of a serious issue to be tried on breach of fiduciary duty is not, of itself, sufficient to secure proprietary injunctive relief. A claimant must go further and establish a proprietary interest in a specific asset. Where the underlying wrong gives rise only to personal claims, however serious, the remedy of a proprietary injunction is not available. Claimants in similar situations may be better advised to pursue Mareva relief, provided they can satisfy the risk-of-dissipation test.
The substantive merits of the dispute, and in particular whether the directors acted in breach of fiduciary duty, remain to be determined at trial. The Court found a serious issue to be tried on that question, and the litigation will continue. The outcome at trial may yet alter the landscape considerably. For now, the judgment provides a principled and instructive analysis of when a limited partner’s interest in a Cayman ELP will, or will not, be sufficient to attract proprietary injunctive relief.
