Further to our previous briefings we can now confirm that the amendments to the Companies Act that were passed by Parliament are due to come into force on 31 August 2022.
These changes include the introduction of the facility to allow a company to restructure under the supervision of a Company Restructuring Officer ("CRO") and to provide for a stay on creditor action where a company is restructuring, for a connected purpose. At present the current mechanism used to provide the ability to restructure is the provisional liquidation regime which is a 'light touch' approach, where the appointed provisional liquidators ("JPLs") oversee the directors who remain in control but this option requires a winding up petition to be filed. The introduction of a CRO is a welcome step to further enhance the Cayman Islands as an international restructuring jurisdiction.
In summary the changes to introduce a framework for a process whereby companies can restructure outside of the liquidation process, via the appointment (by the Court) of a CRO, on the grounds that the company is, or is likely to become, unable to pay its debts; and intends to present a compromise or arrangement to its creditors. Further, this process is capable of being initiated by the directors of the company in a way previously not possible, save for where they were explicitly authorised in the company's constitutional documents.
The CRO is an officer of the Court in the same way as an official liquidator and would be required to meet similar professional qualification, insurance and independence requirements.
The introduction of these changes is a welcome step forward in the Cayman restructuring sphere which has the ability to encourage companies facing financial difficulty to work with their stakeholders to collaborate on the reorganisation and restructuring of the company with the aim of reviving the company's financial health, outside of the stigma of liquidation.
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