Re HSH Cayman
Jurisdiction | Cayman Islands |
Judge | (Jones, J.) |
Judgment Date | 04 January 2010 |
Court | Grand Court (Cayman Islands) |
Date | 04 January 2010 |
(Jones, J.)
G. Halkerston and A. Bolton for the petitioner;
C. Béar, Q.C. and Ms. C. Wilkins for the companies.
Companies Winding Up Rules 2008, O.3, r.2(2): The relevant terms of this sub-rule are set out at paras. 9 and 11.
Companies-compulsory winding up-petition-amendment-court has inherent power to permit amendment of petition not complying with Companies Winding Up Rules-power consistent with and supplementary to overall scheme of Winding Up Rules-fault of petitioner, attorneys or nominees causing omissions not sufficient to justify refusing amendment-amendment allowed if no or few other creditors affected by non-compliance and any prejudice to creditors remedied
Companies-compulsory winding up-petition-form and contents-nomination of liquidators-to contain complete and accurate information on identity and address of nominated liquidators and description of company”s business and location (Companies Winding Up Rules, O.3, r.2(2))-purpose principally to notify general creditors, through appropriate advertisement, who may wish to be heard or object to nominated liquidators
Companies-compulsory winding up-petition-striking out-failure to comply with Companies Winding Up Rules not abuse of process justifying striking out petition if contains properly pleaded cause of action supported by credible evidence-prejudice to creditors remediable through amendment
The petitioner sought to wind up four Cayman companies on the ground that they were unable to pay their debts
The companies were incorporated to act as the general partners in four limited partnerships. The limited partnerships had been established to finance the acquisition of shares in a German bank. The general partners had entered into four separate loan agreements with the petitioner bank to fund the acquisition. The general partners subsequently defaulted on their repayments and the bank petitioned to wind them up on the ground of their insolvency. The petitions were, however, defective in that they failed to comply in several material ways with the procedure set out in the Companies Winding Up Rules, which included the misstatement of the identity of the liquidators to be appointed because of the late substitution
of one of the practitioners as a result of the failure to secure in time indemnity insurance on his behalf.
The Grand Court (Foster, Ag. J.) nevertheless ordered (November 13th, 2009, unreported) the winding up of the general partners. On appeal, the Court of Appeal (Chadwick, P., Forte and Mottley, JJ.A.) set aside the winding-up orders (in proceedings reported at 2010 (1) CILR 114) since the petitioner had failed to comply with the requirements of the Companies Winding Up Rules and the lower court did not have the inherent power to waive compliance. However, since the defects were not incurable, the petitions were stayed pending an application for amendment.
The petitioner applied to amend the petitions and the general partners applied for the petitions to be struck out or dismissed as an abuse of process. The petitioner sought to substitute the correct names and addresses of the qualified insolvency practitioners, as required under Companies Winding Up Rules, O.3, r.2(2)(e), and to insert a statement as to where the general partners carried on business, as required by O.3, r.2(2)(b).
The general partners submitted in reply that no power existed to permit amendment of a winding-up petition since it was not given in the Companies Winding Up Rules or incorporated by reference to the Grand Court Rules. They further submitted that the petitions should instead be struck out as an abuse of process because of their complete disregard for the obligations under the Winding Up Rules.
Held, amending the petitions and refusing the application to strike out:
(1) The court possessed an inherent power to order the amendment of a defective winding-up petition, which failed to comply with the procedure established in the Companies Winding Up Rules, since such a power was supplementary to and consistent with the overall scheme of the Winding Up Rules. Further, the power was necessary to give effect to the Rules as it would otherwise be impossible to make an order for substitution of the petitioner (as provided for in O.3, r.10) without at the same time permitting amendment (paras. 13–14).
(2) The petitions needed to contain complete and accurate information on the identity and address of the person(s) nominated as official liquidator(s) and the description of the company”s business and its location (as required under O.3, r.2(2) of the Companies Winding Up Rules). These requirements were not simply a matter between the petitioner and the court. They were principally for the benefit of the general body of creditors, to enable them to be notified in advance of the hearing of the petition (through appropriate advertisement) to give them the opportunity to be heard at the hearing and to object to the nominated liquidators (paras. 10–12).
(3) The petitioner would be permitted to amend its petitions. The need for amendment arose in the instant case because of the fault of the petitioner”s attorney-who had failed to appreciate that the purpose of the
Rules was not simply to inform the company and the court about the identity of the proposed liquidators-and since any fault on the part of the petitioner, its lawyers or nominees would not be sufficient to justify refusal to...
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