In the Matters of Soundview Elite Ltd Soundview Premium Ltd Soundview Star Ltd
| Jurisdiction | Cayman Islands |
| Judge | The Hon. Chief Justice |
| Judgment Date | 12 December 2013 |
| Judgment citation (vLex) | [2013] CIGC J1213-1 |
| Docket Number | CAUSE NOS, 91,106,107,108,109 and 111,112 and 113 of 2013 |
| Court | Grand Court (Cayman Islands) |
| Date | 12 December 2013 |
IN CHAMBERS
The Hon. Chief Justice
These are a number of petitions for winding up these three Fund Companies, all presented based upon ‘unpaid debts’ within the meaning of section 92(d) of the Companies Law (2012 Revision) (‘the Law’). The petitioners, who are all investormembers of the Fund Companies, assert that the Companies are unable to pay their debts which are in the nature of unpaid redemption payments and are therefore liable to be wound up pursuant to section 93(c) of the Law. While Mr. Giglioli's clients bring their separate petitions to wind up the Companies, he acknowledges that in respect of the companies which are the subject of the petitions in Causes 111–113 of 20131, the petitions brought by Mr. De La Rosa's clients which were first in time, should be heard now. His clients would therefore support those petitions.
Mr. Giglioli also acknowledges that as summonses for directions must first be issued but have not yet been issued in furtherance of his clients' petitions in the other Causes2, those petitions may not be heard now and must be adjourned. It is so ordered. I now proceed to the consideration of the petitions in Causes 111–113.
In respect of each Company there are two heads of claim which are unchallenged:
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(1) Unpaid post June 2011 redemption payment.
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(2) Shortfalls in pre — June 2011 redemption, payments.
— all of which were calculated on the last available net asset value calculations (‘NAVs’).
There is no dispute that the redemption notices were valid and that certain payments fell due as the result. The Funds each later purported to impose gates upon redemptions. But the gating of redemptions is not an issue on these petitions. Indeed, no issue has been
raised. There is no response by way of explanation from the Funds. In each case what there are, are short payments — in each case 80% of redemptions instead of the 90% required by the constitutional documents of the Funds. The short payments are reflected in the petition claims as follows:
Soundview Premium – $243,801.07
Soundview Star – $554,845.67.
Soundview Elite – $711,725.30
Thus, the petitions are based on a series of unexplained and unremedied defaults within the meaning of section 93(c) of the Law.
Regard must be had also to the concerns of the Cayman Islands Monetary Authority (‘CIMA’) as regulator of the Funds. CIMA's report reveals that for four years no audited accounts have been filed by the Funds and CIMA regards this as a serious matter that could involve criminal sanctions. The Funds simply have done nothing about it, although CIMA raised its concerns with them.
It is therefore not surprising that CIMA supports the petitions for winding up and sees the intervention through counsel Mr. Akiwumi on behalf of the Funds today seeking to stay the petitions in deference to Chapter 11 bankruptcy proceedings in New York, as a delaying tactic by the management of the Funds.
Given this background, including the fact that the filing of the petitions to wind-up has been notified to the Companies since the 22nd August 2013 when they were served at their registered offices3; Mr. Akiwumi's arguments against the granting of the petitions in deference to the proposed Chapter 11 proceedings, are to my mind unacceptable.
As he acknowledges, those Chapter 11 proceedings were filed only recently and notwithstanding that the Companies were already on notice of these winding-up proceedings proceedings which are deemed to have commenced once the petitions were presented to this Court4.
No less unattractive is Mr. Akiwumi's further suggestion that the Chapter 11 filing will inevitably operate to render these proceedings an exercise...
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