A new corporate restructuring process for the Cayman Islands
开曼群岛新的重整程序
On 21 October 2021, the Cayman Islands' legislature gazetted the Companies (Amendment) Bill 2021 (Bill) which introduced a new corporate restructuring process in the Cayman Islands (Cayman). The Bill represents a welcome development to the restructuring regime in the Cayman Islands and once again fortifies the Cayman Islands' standing reputation as a leading offshore financial hub and a popular destination for foreign investment opportunities.
2021年10月21日，开曼群岛议会在公报上公布了《2021年公司（修订）法案》，提出了新的公司重整程序。该法案是开曼群岛重整制度的可喜发展，再次提升了开曼群岛作为离岸金融中心和受欢迎的海外投资机会目的地的口碑。
In this article, we examine the amendments introduced in the Bill and the implications it will have for existing and prospective investors in the Cayman Islands.
Overview of Amendments
Current position under the Cayman Companies Act 2021 (Act)
Before the introduction of the Bill, there was no formal restructuring regime in the Cayman Islands akin to the UK's administration process or the US Chapter 11 proceedings. Under the Act, the only option available to a company in distress is to appoint provisional liquidators, the appointment of which will trigger a moratorium that will in turn allow the company breathing space and where appropriate, will enable it to propose a restructuring to its creditors.
In practice, this means that a winding up petition against the company will first have to be presented in order for it to undergo any restructuring. That can be done by the company (through a shareholders' special resolution), its creditors, or contributories. Further, directors may present a winding up petition on the company's behalf without needing the sanction of a shareholders' special resolution provided that such power is expressly provided for in the company's articles.
At the hearing of a winding up petition, the Court has jurisdiction to, inter alia, make appropriate orders to facilitate a restructuring of the company. This would ordinarily involve the appointment of provisional liquidators to facilitate the restructuring process. The presentation of a winding up petition alone will not give rise to a moratorium; only the making of an order for the appointment of a provisional liquidator (or an official liquidator) will have that effect.
The new regime under the Bill
With the introduction of the Bill, Part V of the Act will be amended to include provisions for a company restructuring. The new provisions thereunder introduce a formal, standalone restructuring procedure for companies outside the traditional winding up regime under the Act.
The new regime establishes the concept of a "restructuring officer", a qualified insolvency practitioner who acts as an officer of the court, and who will supervise the company's restructuring process.
A company's directors are empowered under that regime to present a petition for the appointment of a restructuring officer – this can be done without a shareholders' resolution or any express power in the company's articles. That being said, the company's members may have grounds to restrain the directors from doing so where there is a provision in the company's articles which expressly prohibits this.
Under the proposed section 91B, a company may present a petition to the Court for the appointment of a restructuring officer on the basis that the company is or is likely to become unable to pay its debts, and intends to present a compromise or arrangement to its creditors or classes of creditors either pursuant to the Act, the law of a foreign country, or by way of a consensual restructuring.
It will therefore no longer be necessary for a winding up petition to be presented as a precursor to a court-supervised restructuring, and the Court will not have power to wind up the company when presented with a petition to appoint a restructuring officer. Pending the hearing of that application, the company may also apply ex parte to the Court for the appointment of an interim restructuring officer.
An automatic moratorium would be triggered upon the presentation of a petition to appoint a restructuring officer. This will prevent the continuation or commencement of any proceedings against the company without the leave of Court – including all foreign proceedings, and any proceedings to wind up the company. However, secured creditors will still be able to enforce their security against the company, without needing Court sanction and without seeking the approval of the restructuring officer.
The powers conferred on a restructuring officer are generally flexible, and will be subject to the Court's discretion.
Where the restructuring officer proposes to pursue a scheme of arrangement as part of the company's restructuring plan, he/she may make an application within the restructuring proceedings, without the need for separate proceedings under the Act for sanction of that scheme. As a result, there will be significant time and costs savings for a company already in distress.
In addition to the introduction of a standalone restructuring regime, there is another notable amendment in the proposed legislation. That amendment will allow directors of companies incorporated after the Bill comes into force to present a winding up petition on behalf of the company on grounds that the company is unable to pay its debts as they fall due or, where a winding up petition has been presented, to apply on the company’s behalf for the appointment of a provisional liquidator. As stated above, at present, directors may present a winding up petition on the company's behalf without the sanction of a special resolution passed at a general meeting only if such power is expressly provided for in the company's articles of association. The new Bill, however, grants directors this authority without the need for sanction; it will therefore be necessary for provisions to be included in the company's articles to either expressly remove or modify the directors' authority in this regard, should the stakeholders wish to depart from this statutory right.
Implications for the Client
The client as creditor
The interests of creditors of a company intending to appoint a restructuring officer are well-protected under the regime introduced in the Bill.
Amongst other things, the petition for the appointment of a restructuring officer must be heard on an inter partes basis, unless the company can otherwise satisfy the Court that there are grounds justifying an ex parte application.
In addition, creditors of the company, including contingent or prospective creditors, may apply to the Court to seek either a variation or discharge of the order appointing a restructuring officer, or for that officer's removal or replacement. Thus, for example, if the creditor has concerns about the independence of the restructuring officer proposed by the company, they will have an opportunity to nominate their own candidate.
Where the restructuring of a company under the guidance of a restructuring officer fails, and the company is subsequently wound up, the winding up will be deemed to have commenced from the date of the presentation of the petition for the appointment of a restructuring officer. This will affect, inter alia, the scope of the official liquidators' powers to claw back any preference payments made to creditors within the relevant period.
The Bill presents a welcome approach to facilitate company restructurings in the Cayman Islands. The benefits of the 'light-touch' provisional liquidation afforded under the current regime are retained, whilst the negativity and stigma associated with a winding up petition are no longer present with the establishment of a standalone restructuring process. It is anticipated that this will present a more collaborative and cohesive approach in the context of cross-border restructurings.
An original version of this article was first published by Asia Business Law Journal, January 2022.
© Carey Olsen 2022.
《2021年开曼群岛公司法》（“《2021年公司法》”）下的现状。法案提交前，开曼群岛并没有与英国破产管理程序或美国《破产法》第11章程序类似的正式重整制度。根据《2021年公司法》，陷入困境的公司只可选择任命临时清算人；一旦任命了临时清算人，就会启动延期偿债程序，给予公司喘息机会，在适当情况下，还使公司能够向债权人提议重整。
实践中，上述做法意味着，要进行重整，首先必须提交针对公司的清盘申请。清盘申请可由公司自己、公司债权人或出资人提交。如由公司自己提交，公司股东应通过特别决议。此外，董事可代表公司提交清盘申请，无须股东特别决议批准，前提是公司章程明文规定董事有此权力，而且公司是在2019年3月1日之后成立。
举行清盘申请听证后，法院有权发出相关命令，为公司重整提供便利，通常会任命临时清算人以加快重整程序。仅提交清盘申请并不会启动延期偿债程序，只有发出任命临时清算人或正式清算人的命令后才会启动。
法案下的新制度。法案一旦通过，《2021年公司法》第五部分将得以修订，加入有关公司重整的规定。新规定将引入正式的公司重整程序，该程序独立于《2021年公司法》规定的传统清盘制度。
新制度引入了“重整人”的概念。重整人是指符合条件的破产执业律师，他将充当法院人员，监督公司重整程序。
该制度赋予公司董事提交任命重整人申请的权力。董事行使该权力，无须股东决议或公司章程明文规定的其他权力批准。尽管如此，如若公司章程有规定禁止董事行使该权力，公司成员即有理由阻止董事提交上述申请。
根据法案建议的第91B条，公司如果无力或可能变为无力偿付债务，并有意根据《2021年公司法》、外国法律，或因协商一致同意重整，向债权人或特定类别债权人提交债务和解或整理方案，即可向法院提交任命重整人的申请。
因此，提交清盘申请将不再是法院监督下重整的前提条件，法院也将丧失在收到任命重整人的申请后对公司予以清盘的权力。等待申请听证期间，公司还可单方面向法院申请任命临时重整人。
提交任命重整人的申请后，延期偿债程序将自动启动。延期偿债程序一旦启动，无需法院许可，即可阻止针对公司的任何程序的继续或提起，包括所有外国程序或对公司清盘的程序。不过，有担保债权人仍能执行对公司的担保，无需法院批准，也无需征求重整人批准。赋予重整人的权力一般都很灵活，并受制于法院的自由裁量权。
重整人如果提议将债务整理方案纳入公司重整计划，可在重整程序内提交申请，不必根据《2021年公司法》另行提起批准该方案的程序，从而为本已身处困境的公司节约大量时间和成本。
除引入独立的重整制度外，法案还提出了另外一项值得注意的修订。该修订将允许法案生效后设立的公司的董事以公司无力偿还到期债务为由，代表公司提交清盘申请，或在已提交清盘申请的情况下，代表公司申请任命临时清算人。
如上所述，不必股东大会通过特别决议批准，董事即可代表公司提交清盘申请，目前需满足两项条件，即公司章程明文规定了该权力，而且公司于2019年3月1日之后成立。但是，新法案将该权限授予董事，同时并未设置上述任何限制。如果股东希望排除该法定权利，公司章程必须明文废除或修改董事在此方面的权限。
对客户的影响
客户为债权人。在法案引入的制度下，公司如有意任命重整人，其债权人的利益会得到妥善保护。除其他方面外，重整人任命申请听证还必须有全体当事人参加，除非公司提出理由，使法院相信单方面申请的正当性。
此外，公司债权人，包括或有债权人或潜在债权人，可向法院申请，寻求变更或驳回任命重整人的命令，或寻求免去或更换重整人。这样，比如债权人若担心公司提议的重整人的独立性，将有机会提名自己的人选。
如果在重整人指导下重整失败，公司随后清盘，清盘将视为于任命重整人的申请提交之日启动。除其他方面外，若在相关期限内向债权人优先支付款项，这还将影响正式清算人追回该等款项的权力的范围。
结 语
法案提出了便利开曼群岛公司重整的好方法。独立重整程序建立后，现行制度下“低干涉”临时清算的优点得以保留，同时与清盘申请有关的消极影响和污名将不复存在。
可以预见，独立重整程序将带来协作性更强、更加有凝聚力的跨境重整方法
