Re Citv

• Jurisdiction: Cayman Islands
• Judge: (Harre, J.)
• Judgment Date: 19 April 1993
• Court: Grand Court (Cayman Islands)
• Date: 19 April 1993

Grand Court

(Harre, J.)

IN THE MATTER OF CAYMAN ISLANDS TELEVISION AND VIDEO PRODUCTION COMPANY LIMITED (trading as CITV–33)

S. McCann for the petitioners;

A.S. McField for the respondent.

Case cited:

(1) Welsh Brick Industries Ltd., Re, [1946] 2 All E.R. 197, applied.

Legislation construed:

Insolvency Act 1986 (c.45), s.125(2):

‘If the petition is presented by members of the company as contributories on the ground that it is just and equitable that the company should be wound up, the court . . . shall make a winding-up order; but this does not apply if the court is also of the opinion both that some other remedy is available to the petitioners and that they are acting unreasonably in seeking to have the company wound up instead of pursuing that other remedy.’

s.271(1):

‘The court shall not make a bankruptcy order on a creditor”s petition unless it is satisfied that the debt . . . in respect of which the petition was presented is either-

(a) a debt which, having been payable at date of the petition or having since become payable, has been neither paid nor secured or compounded for, or

(b) a debt which the debtor has no reasonable prospect of being able to pay when it falls due.’

Companies-compulsory winding up-grounds for winding up-inability to pay debts-winding-up order not justified for genuinely disputed debt-attempts to negotiate repayment of money improperly withdrawn from creditor”s account for benefit of company not evidence of genuine dispute

Jurisprudence-reception of English law-incorporation of English law-English Insolvency Rules 1986 applicable as guide in Cayman courts in absence of local rules

The petitioners sought a winding-up order in respect of the respondent company.

The directors of the respondent company had the authority to draw on the petitioners” account as part of a property management agreement between the petitioners and another company of which they were also the directors. Unknown to the petitioners, money was withdrawn from this account in favour of the respondent company and on becoming aware of this withdrawal, the petitioners and other creditors demanded its repayment. Despite attempted negotiations, no satisfactory arrangement was made for repayment and the petitioners applied for the winding up of both companies in separate proceedings.

The petition in respect of the respondent company was opposed inter alia on the grounds that (a) it had no connection with the petitioners, in that the money had been borrowed by the property management company and although it had been used for the benefit of the respondent company, it had fully repaid the property management company and consequently had no debt that could be the subject of this petition; (b) the property management company had offered a schedule of repayments which had been refused by the petitioners and, furthermore, some of the money had already been repaid thus reducing the debt; and (c) it was unreasonable, and under the English Insolvency Act 1986, ss. 125(2) and 271(1), which applied in the Cayman Islands, the court ought to refuse to grant the order and direct the petitioners to seek some other remedy. In any case, the procedural requirements for bringing the petition as specified in the English Insolvency Rules 1986, r.4.22(2), which also applied in the Cayman Islands, had not been observed.

Held, granting the winding-up order:

(1) It was well established that a winding-up petition was not an appropriate way of...