Ovs Capital Management (Cayman) Ltd

• Jurisdiction: Cayman Islands
• Judge: (Quin, J.)
• Judgment Date: 28 February 2017
• Court: Grand Court (Cayman Islands)
• Date: 28 February 2017

Grand Court, Financial Services Division

(Quin, J.)

IN THE MATTER OF OVS CAPITAL MANAGEMENT (CAYMAN) LIMITED

C. Moran and G. Boos for the petitioners.

Cases cited:

(1) AJW Master Fund II Ltd., In re, 2011 (1) CILR 363, considered.

(2) Pan Ji China Fund LP, In re, Grand Ct., April 3rd, 2014, unreported, applied.

(3) Priceland Ltd., Re, [1997] BCC 207; [1997] 1 BCLC 467, followed.

Legislation construed:

Companies Law (2016 Revision), s.123(1):

“Within twenty-eight days of the commencement of a voluntary winding up, the liquidator or, in the absence of any liquidator, the directors shall—

. . .

(c) file the director’s declaration of solvency with the Registrar (if the supervision of the court is not sought) . . .”

s.124(1): “Where a company is being wound up voluntarily its liquidator shall apply to the Court for an order that the liquidation continue under the supervision of the Court unless, within twenty-eight days of the commencement of the liquidation, the directors have signed a declaration of solvency in the prescribed form in accordance with subsection (2).”

s.159: “If a company or any member or creditor thereof feels aggrieved by the company having been struck off the register in accordance with this Law, the Court on the application of such company, member or creditor . . . may, if satisfied that the company was, at the time of the striking off thereof, carrying on business or in operation, or otherwise, that it is just that the company be restored to the register, order the name of the company to be restored to the register . . .”

Companies—Register of Companies—restoration to register—company restored to register under Companies Law (2016 Revision), s.159 if court satisfied, at time of striking off, that company carrying on business or in operation or otherwise that just to restore—broad interpretation gives court widest powers to restore—solvent company in voluntary liquidation struck off for voluntary liquidator’s administrative failures restored as “in operation” (i.e. seeking to secure distribution from liquidation of subsidiary and transfer assets to shareholder before dissolution) and “just” in circumstances

Companies—winding up under court’s supervision—failure to sign and file declaration of solvency—rebuttable presumption of insolvency if directors fail to sign and file declaration of solvency required by Companies Law (2016 Revision), s.123(1)(c)—court has discretion whether to make supervision order—not made where company solvent and failure to comply with s.123(1)(c) administrative error of voluntary liquidator

The petitioners sought orders restoring the company to the register of companies and allowing the voluntary liquidation of the company to continue without court supervision.

The first petitioner was the sole shareholder and a director of a company incorporated in 2010 as the holding company in an investment management company structure. In 2014, the first petitioner decided to retire and to wind up the company. He appointed the second petitioner as the voluntary liquidator. At that date the company was solvent, with cash of approximately £1.4m. and £90,000 due from the liquidation of its subsidiary. The company’s sole liability was a loan of £100,000 due to the first petitioner. It was intended that the company would not be dissolved until it had received the £90,000 and passed the assets to the first petitioner. The first petitioner signed a declaration of solvency as director of the company but the declaration was not also signed by the other director.

The voluntary liquidator failed to file with the Registrar of Companies the notice of voluntary liquidation, its consent to act and the declaration of solvency. The company was struck off the register in March 2015 forfailure to pay its annual returns. The petitioners sought an order under s.159 of the Companies Law (2016 Revision) restoring the company to the register so that its assets could be properly realized and transferred to the first petitioner, who intended to appoint a new voluntary liquidator.

Section 124 of the Companies Law (2016 Revision) provided that “where a company is being wound up voluntarily its liquidator shall apply to the Court for an order that the liquidation continue under the supervision of the Court unless, within twenty-eight days of the commencement of the liquidation, the directors have signed a declaration of solvency in the prescribed form in accordance with subsection (2).” The petitioners sought an order that, given the company’s solvency, the voluntary liquidation could continue without court supervision despite the previous failure to file the declaration of solvency. They submitted that the failure to file the declaration gave rise to a rebuttable presumption of insolvency and that, where the company was in fact solvent, the court had discretion to allow voluntary liquidation to continue without court supervision.

Held, granting the orders sought:

(1) The company would be restored to the register pursuant to the Companies Law (2016 Revision), s.159. Section 159 permitted a company to be restored to the register if the court was satisfied that the company was, at the time of striking off, carrying on business or in operation or otherwise...