Re Rhone Holdings L.P.

• Jurisdiction: Cayman Islands
• Court: Court of Appeal (Cayman Islands)
• Judge: (Chadwick, P., Rix and Field, JJ.A.)
• Judgment Date: 03 February 2016
• Date: 03 February 2016

Court of Appeal

(Chadwick, P., Rix and Field, JJ.A.)

IN THE MATTER OF RHONE HOLDINGS L.P.

RESERVOIR CAPITAL MASTER FUND II L.P. and THREE OTHERS

and

RITCHIE CAPITAL PARTNERS L.P. and TWO OTHERS

J. Asif, Q.C. and Ms. P. Mitchell for the appellants;

T. Lowe, Q.C., D. Butler and Ms. G. King for the respondents.

Legislation construed:

Companies Law (2013 Revision), s.92: The relevant terms of this section are set out at para. 8.

s.95(1): The relevant terms of this sub-section are set out at para. 9.

s.95(2): The relevant terms of this sub-section are set out at para. 10.

Exempted Limited Partnership Law 2014, s.36(3): The relevant terms of this sub-section are set out at para. 12.

Partnership—exempted limited partnership—winding up—petition to wind up partnership to be struck out pursuant to Companies Law (2013 Revision), s.95(2) if partners agreed not to present winding-up petitions—requirement to strike out not inconsistent with Exempted Limited Partnership Law 2014, s.36(3), which empowers court to make any winding-up order it considers just, as s.36(3) explicitly incorporates Part V and s.95(2) of Companies Law

The applicants sought the appointment of joint provisional liquidators in the Grand Court and petitioned to wind up the partnership on the just and equitable ground.

The applicants and the respondents established an exempted limited partnership pursuant to the Exempted Limited Partnership Law 2014. The partnership agreement stipulated that neither party was to present a petition to wind up the partnership, but the applicants nevertheless sought

a winding-up petition on the basis that the respondents were charging them significant sums in expenses which were not bona fide, and that there had therefore been a loss of confidence between the partners.

An ex parte order was granted by the Grand Court (Mangatal, J.) appointing joint provisional liquidators pursuant to the Exempted Limited Partnership Law.

At the subsequent inter partes hearing, the respondents submitted that the application should be dismissed pursuant to s.95(2) of the Companies Law (2013 Revision), as the applicants had been contractually bound by the partnership agreement not to present a winding-up petition. The applicants submitted that s.95(2) was inapplicable as it was contrary to s.36(3)(g) of the Exempted Limited Partnership Law, which stipulated that the court was entitled to make any winding-up order it considered to be just and equitable. The court struck out the petition as it was contrary to s.95(2) of the Companies Law.

The applicants subsequently failed to file a notice of appeal within the time limit prescribed by the Court of Appeal Rules, and therefore applied for an extension of time in order to apply for leave to appeal.

They submitted that they had a realistic prospect of success on appeal as (a) the Exempted Limited Partnership Law stipulated that legislative provisions which were inconsistent with it should not be applied, and therefore s.36(3)(g) of that Law overrode s.95(2) of the Companies Law, allowing a winding-up petition to be presented; (b) in any event, s.95(2) of the Companies Law should not be applied as it was contrary to public policy to enforce an agreement not to wind up an exempted limited partnership; and (c) the wording of s.95(2) indicated that the court was not compelled to dismiss a winding-up petition which was contrary to a partnership agreement as it was empowered to adjourn a hearing, suggesting that dismissal of a petition was not mandatory.

Held, refusing to grant an extension of time:

(1) Permission to extend time to seek leave to appeal would not be granted as the applicants had no realistic prospect of success on appeal. Section 36(3) of the Exempted Limited Partnership Law 2014 was not expressly or impliedly inconsistent with s.95(2) of the Companies Law (2013 Revision) and did not override it as s.36(3) expressly provided that Part V (including s.95(2)) of the Companies Law was applicable to exempted limited partnerships; the submission that the winding-up petition should not have been struck out on the basis that s.36(3) of the Exempted Limited Partnership Law was applicable did not therefore have a realistic prospect of success on appeal (paras. 20–21; para. 25).

(2) The submission that s.95(2) of the Companies Law should not be applied as it was contrary to public policy also had no realistic prospect of success as the provision clearly expressed a legislative decision that parties should be bound by agreements not to present winding-up petitions (para. 22).

(3) The reference in s.95(2) to the power of the court to adjourn the hearing of a winding-up petition did not indicate that it was entitled to allow...