Knowledge

The Honourable Justice Segal's ruling, on 29 October 2025, in the long-running insolvency case In the Matter of BJB Career Education Company Limited (In Provisional Liquidation) [2025] CIGC (FSD) 102 ("BJB Career") provided a pragmatic solution to enable joint provisional liquidators ("JPLs") to seek their own release and discharge from their appointment in the absence of a stakeholder able to do so as prescribed by the Companies Act (2025 Revision) and the Cayman Winding Up Rules ("CWR").  The judgment reinforces the Cayman court's willingness to find creative and pragmatic solutions where legislation is silent and provides provisional liquidators with an opportunity to take charge of their own release if needs be. 

The key takeaways from the BJB Career ruling are:

• The ruling has effectively filled a gap where statutory provisions are silent and granted provisional liquidators the right to seek their own release and discharge from their appointment in the absence of a suitable stakeholder to apply (in this case a shareholder).
• A carve-out is imposed on the release of the JPLs for any future claims for any wrongdoing by them but protection is provided as such claims can only be brought by a liquidator of the company with leave of the court.
• Any proposed release of the JPLs' appointment should be widely advertised for a minimum of 21 days to allow anyone with an interest in the company to raise any objections.

Background

The JPLs were appointed 10 years ago to act on behalf of BJB Career following the successful petition for a winding-up order by Crescent Jade Limited (a shareholder of BJB Career) on the just and equitable ground.  The JPLs were ordered to take control of BJB Career's assets, including any of its subsidiaries, and investigate potential legal proceedings on behalf of the company in Hong Kong and China.  Over the course of their appointment the JPLs exhausted any potential legal proceedings in both jurisdictions.  Further, the JPLs conducted various financial assessments of the company and filed five reports with the Cayman court – the final report dated 30 April 2025 confirmed that the JPLs had fulfilled the purpose of their appointment and would be seeking release from their appointment thereby providing notice to any creditors or other stakeholder with a financial interest in BJB Career.  This case was unusual as JPLs are generally appointed on a short-term basis pending an official liquidation or restructuring and their appointment does not necessarily result in the termination of the company and does not always fully oust the jurisdiction of the directors as that is dependent on the order appointing them.  Once JPLs are discharged the company returns to the ownership of the shareholders and the governance of a board of directors.

Lack of a shareholder is no barrier to release

As a result of a share transfer, the petitioner had lost standing as a shareholder to seek the JPLs' release, which resulted in the JPLs issuing a summons for their own release and discharge.  However, neither the Companies Act (2025 Revision) nor the CWR O.4, r.5(1) expressly state that provisional liquidators have standing to seek such an order, particularly when appointed on a shareholder's petition.  Notwithstanding this omission, the CWR O.4, r.5(2) provides provisional liquidators with the unlimited right to seek directions from the court (including a variation of the order appointing them), which the Judge considered in this instance gave the JPLs the right to seek their own release.

Significantly, this ruling underpins the court's inherent jurisdiction to manage cases justly and expeditiously and provide pragmatic solutions where the statutory provisions are silent.

Liability carve-out 

The Judge also considered whether the JPLs' release should be subject to a carve-out in respect of any future claims for misfeasance, misappropriation or improper retention of money or assets and/or breach of fiduciary duty similar to the provision in section 174(4) of the UK Insolvency Act 1986.  The Judge was of the view that such a carve-out in the Cayman Islands was appropriate, unless the JPLs could demonstrate that it was unfair or unwarranted. 

Importantly, the Judge reiterated that the right to bring future claims against the JPLs should only be brought by a liquidator of the company with leave of the court.  This restriction protects the JPLs from any unwarranted future claims following their release and discharge.

Notice requirements to ensure fairness and transparency

It was further stated that, prior to the JPLs' release from their appointment, shareholders and creditors should be given ample opportunity to raise any objections.  The Judge suggested that the proposed release should be advertised in all relevant newspapers and media outlets to ensure full transparency for a minimum of 21 days.  The fact that the JPLs for BJB Career had lodged their final report with the court approximately six months ago, which was available upon request by any creditor or person with a financial interest in the company, and no objections had been raised, satisfied the notice requirement.

Post-release – corporate governance

Whilst the Judge did not formally order the JPLs to do so, he noted in his ruling that the JPLs should advise the company's shareholders to appoint directors to manage the company going forward and to ensure that proper corporate governance was in place following the JPLs' release and discharge, which would have the effect of putting the company back into the hands of the shareholders and any board of directors that remained in existence.

Conclusion

As well as providing specific guidance on a lacuna in the law in the Cayman Islands with respect to the release of provisional liquidators of a company, this case demonstrates the willingness of the Cayman court to utilise its inherent jurisdiction to cover situations where a pragmatic solution is needed. 

The Bedell Cristin insolvency and restructuring team has successfully worked with clients who have had analogous situations and is always willing to look for creative solutions.