Re Euro Bank Corporation

• Jurisdiction: Cayman Islands
• Judge: (Henderson, Ag. J.)
• Judgment Date: 13 May 2003
• Court: Grand Court (Cayman Islands)
• Date: 13 May 2003

Grand Court

(Henderson, Ag. J.)

IN THE MATTER OF EURO BANK CORPORATION (IN LIQUIDATION)

A.J. Jones, Q.C. and C.D. McKie for the applicant.

Cases cited:

(1) Humber Ironworks & Shipbuilding Co., In reELR(1869), L.R. 4 Ch. App. 643, dicta of Giffard, L.J. applied.

(2) Lines Bros. Ltd., In re, [1983] Ch. 1; [1982] 2 All E.R. 183, considered.

(3) UDL Argos Engr. & Heavy Indus. Co. Ltd. v. Li Oi Lin, [2001] 4 H.K.C.F.A.R. 358, dicta of Lord Millett applied.

Legislation construed:

Companies Law (2002 Revision) (Laws of the Cayman Islands, 1963, cap. 22, revised 2002), s.86(1):

‘Where a compromise or arrangement is proposed between a company and its creditors or any class of them, or between the company and its members or any class of them, the Court may, on the application of the company or of any creditor or member of the company, or where a company is being wound up, of the liquidator, order a meeting of the creditors or class of creditors, or of the members of the company or class of members, as the case may be, to be summoned in such manner as the Court directs.’

Grand Court Rules, 1995 (Revised), O.102, r.21(3)(b):

‘The summons under paragraph (2) shall be supported by an affidavit which shall-

(b) contain such information as may be necessary to enable the Court to determine whether it should convene class meetings and, if so, the composition of the classes …’

Practice Direction cited:

Practice Direction No. 1/2002, Schemes of Arrangement and Compromise under the Companies Law, s.86.

Companies-arrangements and reconstructions-‘compromise or arrangement’-scheme whereby creditors set aside contractual rights to interest in exchange for interest calculated in accordance with scheme, so that some creditors forfeit interest whilst others receive it without prior entitlement, is ‘compromise or arrangement’ under Companies Law (2002 Revision), s.86(1), to consider which court may summon creditors” meeting

Companies-arrangements and reconstructions-sanction by court-‘classes’ in scheme for payment of post-liquidation interest to depend on similarity or dissimilarity of participants” rights against company and scheme”s effect on those rights-group accepted as ‘class’ if no practical way to sub-divide

The liquidators of a bank applied for the court to convene creditor and shareholder meetings to consider a proposed compromise or arrangement for the payment of post-liquidation interest to admitted creditors.

All the admitted creditors had either been, or were about to be, paid in full on their claims to principal. The liquidators of the bank also proposed a compromise or arrangement for the payment of post-liquidation interest to them and any surplus thereafter to the shareholders. Many of the creditors were entitled to interest under their pre-liquidation contracts with the bank, but some were not, and the precise rates applicable to each creditor would be difficult to ascertain. The proposed scheme reduced the time and cost of the liquidators” task of calculating post-liquidation interest. Under the scheme, the various amounts and rates of post-liquidation interest payable under contract would be replaced by that proposed in the scheme, with the result that...