The Companies Law (2013 Revision) and the Exempted Ltd Partnerships Law 2014 and Rhone Holdings, L.P.
| Jurisdiction | Cayman Islands |
| Judgment Date | 29 September 2015 |
| Judgment citation (vLex) | [2015] CIGC J0929-1 |
| Date | 29 September 2015 |
| Docket Number | CAUSE NO. FSD 119 OF 2015 (IMJ) |
| Court | Grand Court (Cayman Islands) |
Justice Ingrid Mangatal
Rhone Holdings, L.P. (‘the Partnership’) is an exempted limited partnership formed on 7 March 2007 pursuant to the laws of the Cayman Islands and whose registered office isIntertrust Corporate Services (Cayman) Limited, 190 Elgin Avenue, George Town, Grand Cayman KYI-9005. The Partnership was registered on 22 March 2007.
Reservoir Capital Master Fund II L.P., Reservoir Capital Master Fund L.P., Reservoir Capital Investment Partners, L.P., and Reservoir Capital Partners, L.P. (together, ‘the Petitioners’) are all the limited partners in the Partnership.
The Partnership has two general Partners: Rhone Capital (GP) Ltd., an exempt company registered in the Cayman Islands (‘the Ritchie GP’), and Rhone Holdings SLP, L.L.C., a Delaware, U.S.A. limited liability company (‘the Reservoir GP’).
Mr. Thane Ritchie is a Director of Ritchie Capital Management, L.L.C. and Ritchie Capital Management Ltd. (collectively ‘RCM’) and of the Ritchie GP. (RCM and the Ritchie GP are collectively ‘the Respondents’). The Ritchie GP is controlled by RCM.
The Reservoir GP is controlled by the Petitioners, which are investment funds managed by Reservoir Capital Management, L.L.C., a Delaware limited liability corporation.
The Petitioners are also shareholders in Rhone Holdings II Limited (‘Rhone II’) which according to the Petition is, and has been at all material times the sole asset owned by the Partnership.
On 22 July 2015, the Petitioners filed a Winding Up Petition, seeking to have the Partnership wound up in accordance with theCompanies Law (2013 Revision) (‘the Law’) and the Exempted Limited Partnership Law (2014 Revision) (‘the ELPL’).
On 23 July 2015, on the hearing of an ex parte application filed with the Winding Up Petition on 22 July 2015, on behalf of the Petitioners, this Court made, amongst other orders, an order (‘the Order’), appointing Mr. David Griffin and Mr. Andrew Morrison of FTI Consulting (Cayman) Ltd., Joint Provisional Liquidators (‘the JPLs’) of the Partnership.
On 6 August 2015, the Respondents filed a Summons seeking the following orders and directions:
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‘1. [That] The Petition be struck out as an abuse of the Process of the Court.
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2.That the Petitioners do pay the Respondents their costs of and occasioned by the Petition on the indemnity basis.
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3.That the costs of the [JPLs] be paid by the Petitioners.’
I heard extensive contested legal argument in respect of this application to strike out over two days, 12 and 13 August 2015. I wish to thank and commend Counsel on both sides for the high quality and clarity of the submissions and thorough research. The Court has been greatly assisted at thisinter partes hearing.
The Respondents had also filed a Summons on 5 August 2015 seeking to have the Order appointing the JPLs discharged. However, in light of the extensive nature of thearguments in respect of the Striking Out Summons, and the additional argument and evidence that would have to be referred to if the Summons to Discharge was also to be t with, all parties appreciated that this could not all be accomplished in the limited time available for the hearing.
It was also indicated to Counsel that I would be on leave and off the island for two weeks as of 15 August 2015 and would for that time not be able to conduct further hearings. Both sides stressed the, urgency of the matter. Counsel for the Respondents, learned Queen's Counsel Mr. Lowe, highlighted the allegedly ‘calamitous effect of the …Order and the winding up proceedings on the whole structure’ of the Partnership. Learned Queen's Counsel Mr. Asif pressed the points which he had made at theex parte hearing, notably as to the urgency of having and maintaining the JPLs in place to prevent alleged dissipation or misuse of the Partnership's assets, and alleged mismanagement or misconduct on the part of the Ritchie GP. It was understood and agreed that I would deliver my decision on or before 18 August 2015, with written reasons to follow.
On 18 August 2015, I delivered the following Judgment and made the following Order:
‘Upon the Respondents' Summons filed 6 August 2015 coming on for hearing, IT IS HEREBY ORDERED AS FOLLOWS:
1.The Petition is struck out as an abuse of the process of the Court.
2.The Petitioners are to pay the Respondents their costs of and occasioned by the Petitioner on an indemnity basis.
3.The Costs of the Joint Provisional Liquidators are to be paid by the Petitioners.
4.Written reasons for this decision to follow shortly.
5.Any consequential applications by the parties or by the Joint Provisional Liquidators are to be listed for hearing on the first convenient open date after 7 September 2015.’
On the 8 September 2015, the Court was asked to sign off on the formal order herein. The following order, which was presented, approved as to form and content by the parties, was signed. This order was substantially in the terms above, except that it was more detailed and dealt with consequential aspects of the matter, in relation to the JPLs. So far as material, it reads as follows:
‘IT IS HEREBY ORDERED THAT:
The Petition be and is hereby struck out as an abuse of the process of the Court;
The Joint Provisional Liquidators (JPLs) appointed by Order dated 23 July 2015 be and are hereby discharged;
The JPLs shall be at liberty to return or destroy the Company's books and records collected in by them and shall not be required to retain any liquidation file;
The Second and Third Affidavits of David Griffin referred to in the Schedule shall stand as the JPLs report to the Court and the JPLs shall not be required to file any further report in relation to their conduct of the provisional liquidation;
The Petitioners shall pay to the Respondents their costs of and occasioned by the Petition on an indemnity basis; and
The Petitioners shall pay the costs and expenses of the JPLs on a full contractual indemnity basis pursuant to their undertaking to the Court.’
There were four main grounds upon which the Respondents argued that the Petition should be struck out as being an abuse of the process of the Court. These were essentially, as follows:
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It was an abuse of process to present a petition when the Petitioners were precluded from doing so under the Partnership Agreement.
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The availability of alternative relief or remedies.
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The lack of any tangible interest of the Petitioners in a winding up.
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Misuse of confidential information.
By way of email copied to both parties, responding to Mr. Asif Q.C.'s query as to which of the four grounds argued were successful after I made my decision on the 18 August, I responded as follows:
‘The contractual agreement not to pursue winding up relief point has succeeded. As that point has succeeded, I have not gone on at this time to consider the other points argued.’
I confirm in these written reasons that this was the basis of my decision. As Mr. Lowe Q.C. argued at the time of the hearing, this was a discreet legal point which could be decided upon by the Court and which determined the application.
In the event, having reflected on the matter, and having advised myself fully, it appears to me that the only point that I should address in these reasons is the point which formed the basis of my decision on 18 August. Thus, whilst the other points were important and very comprehensively and thoroughly argued, in my judgment it would not be appropriate toaddress my mind to them. One highly persuasive reason is that whatever I had to say would now be obiter. The other is that RCM have now filed a law suit, Cause G151/2015, against the Reservoir entities and another, on the basis of the same or similar points argued in this Striking Out Summons, in relation to the alleged misuse of confidential information. I regret that time, circumstances, the nature of the applications, and indeed, Counsels' own preferences, did not allow for argument to be addressed to me solely on this point about the contractual agreement. I regret also that there may have been some waste of time and resources in dealing with the other points. However, I am fortified in my view as to the correct course that I should adopt at this stage, by a passage I came across in the recent unreported judgment of the Cayman Islands Court of Appeal, notably that of Chadwick P. in Cayman Islands Tax Information Authority v. MH Investments, JA Investments Limited, C.I.C.A. No. 31 of 2013, judgment revised from transcript and released 31 July 2015. At paragraph 39, the learned President expressed sentiments, which, although made in relation to an appellate court, in my view apply just as much, if not more forcefully, to a judge at first instance. Chadwick P. observed the following:
‘39. We were invited to go onto decide a number of questions which, it is accepted, no longer arise on this appeal; but which, it is said, may arise in the future and on which the views of this Court would be of some value. We declined that invitation. For my part, I declined it for two reasons. First, I think it is dangerous for an appellate court below the level of the final court of appeal-in this context, the Privy Council — to venture opinions on matters which it does not need to decide. In any future litigation about those matters, it will be said by one party or the other that the opinions being obiter — are not binding and carry little or no weight…..’
The JPLs were represented by Mr. Mark Goodman of the firm Campbells. On the first morning of the hearing, Mr. Goodman indicated...
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