Claims by funds against investors who have successfully redeemed have hitherto enjoyed limited success in the Cayman Islands. Successful claims have been limited to those where a fairly strict test for fraudulent preference is met, the fund has to show that there was an intention to prefer the particular creditors over the general body. Today’s decision in the Privy Council bucks that trend. The decision overturns decisions of the Cayman Grand Court and Court of Appeal and in doing so opens the door to clawback claims based in constructive trust resulting from the unlawful character of the redemption payment itself.

In a decision that overturns the Cayman Islands Court of Appeal and the Chief Justice of the Cayman Islands at first instance, the Privy Council has declared that redemption payments made at a time when a Cayman Islands investment fund was unable to pay its debts as they fell due were unlawful pursuant to section 37(6)(a) of the Companies Law (2007 Revision) and has remitted the matter to the Grand Court to determine whether the recipient investor is accountable for those payments as a constructive trustee.

Click below to read more. Feel free to get in touch with your usual Appleby contact for further details.

Read more




Cayman Islands

Twitter LinkedIn Email Save as PDF
More Publications
27 Sep 2022

Similar but Different

While the basic features of the trust remain, there are some notable differences in how trusts can b...

30 Aug 2022

The Cayman Islands restructuring officer regime comes into force on 31 August 2022

These new proceedings will significantly enhance the Cayman Islands restructuring regime.

4 Aug 2022

Norwich Pharmacal orders: the right medicine for third party disclosure of information and documents in the Cayman Islands

A Norwich Pharmacal order (NPO) is a disclosure order available in the Cayman Islands to compel a th...

Contributors: Susan Fallan
1 Jun 2022

The 2022 Cayman Islands Real Estate Guide

The Real Estate 2022 guide provides the latest legal information on the impact of disruptive technol...

Contributors: Norman Klein
28 Apr 2022

Restructuring the offshore debt of Chinese Real Estate Developers

This article sets out how the current regimes in the Cayman Islands and the BVI can assist with rest...

Contributors: Crystal Au-Yeung
28 Apr 2022

Assignment, novation or sub-participation of loans             

Transfers of loan portfolios between lending institutions have always been commonplace in the financ...

26 Jan 2022

Appleby contributes four chapters to Global Legal Insights – Fund Finance 2022: Cayman Islands

2021 has been an incredibly impressive year for the global subscription credit and fund finance mark...

Contributors: Georgina Pullinger
27 Oct 2021

We hope this registers! A summary of Cayman corporate and partnership registers in a finance transaction.

Because we know that it can be a little befuddling, Appleby has set out a guide to the various Cayma...

7 Oct 2021

Regulatory Round-Up: Cayman Islands Q3 2021

Appleby Cayman’s Our latest Regulatory updates for the Cayman Islands up to Q3 2021.

13 Sep 2021

Loans & Secured Financing in the Cayman Islands 2021

First published in Getting the Deal Through 2021. This practice guide provides topical analysis of L...

Contributors: Alexandra Simpson