11 June 2021
A recent ruling of the Cayman Court confirms the appropriate jurisdiction to be invoked when seeking approval of former joint voluntary liquidators' ("JVLs") fees when acting in their capacities as statutory trustees of the assets of companies following the dissolution of the companies.
The background facts and context of the application
The judgement of the Chief Justice in the matter of the F&C Warrior Funds1 (the "Companies") concerned an application for the approval of the former JVLs' fees incurred following the dissolution of the Companies. The work undertaken by the JVLs involved their steps taken to return the unclaimed assets of the Companies to the former investors (primarily involving communications with the former investors and dealing with know your client issues). Section 153 of the Companies Act provides that at the end of one year, after the dissolution of the company, the former liquidator should transfer any funds/assets held on trust, but unclaimed to the Minister of Finance. Some of the cash assets held by the JVLs were actually cash left from outstanding redemptions to former investors.
The application was made pursuant to Section 48 of the Trusts Act. Section 48 in broad terms provides that any trustee may "apply to the Court for an opinion, advice or direction on any question respecting the management or administration of the trust money or assets". The Cayman winding up rules provide that former liquidators may be paid a reasonable fee "the basis and amount of which shall be fixed by order of the Court". The former JVLs sought the Court's approval for its fees to be paid on a time spent basis.
The Cayman Court approved the JVLs fees on a time spent basis to a specified maximum amount. Further it endorsed the basis upon which the application was brought namely pursuant to Section 48 and in keeping with the winding up rules. It further confirmed that there is Cayman authority2 to allow JVLs to recover fees comprised of funds left over from outstanding redemptions. The balance of the assets held following the payment of the approved fees was directed to be paid to the Financial Secretary.
The decision provides a useful reminder of the interesting interplay between the Trusts Act and the companies' legislation.
If you would like any further information, please get in touch with your usual Bedell Cristin contact or one of the contacts listed.
1 In the matter of F&C Warrior Fund Limited (Dissolved); In the matter of F&C Warrior II Fund Limited (Dissolved).
2 In Re Caledonian Securities Limited (In official liquidation) 2016 (1) CILR 310.