Corporate Insolvency - Law Reform Commission
Corporate Insolvency
Description
In 2002, the Financial Services Secretariat commissioned a review of insolvency law and practice in the Cayman Islands following issues identified in KPMG’s review of financial regulation in the Caribbean Overseas Territories and Bermuda.
An initial report, dated 29 May, 2002, focused on cross-border insolvency and examined the extent to which Cayman Islands law was consistent with the UNCITRAL Model Law on Cross-Border Insolvency.
A broader review was subsequently undertaken by a private sector committee comprising insolvency practitioners and legal professionals. This work was carried out through a number of working groups examining discrete areas of insolvency law.
The committee submitted its report and recommendations to the Law Reform Commission (“the Commission”) in September 2005, following which the Commission assumed responsibility for the review.
Terms of Reference
The Commission conducted its own consultation process, building on the work of the private sector committee. This included input from the Cayman Islands Monetary Authority and other relevant stakeholders not represented in the initial review.
The review considered the adequacy of the existing insolvency framework, including –
i. the complexity and outdated nature of the law;
ii. reliance on foreign insolvency rules and case law; and
iii. the need for a modern, codified regime suited to the Cayman Islands’ financial services industry.
Outcomes
On 26 April, 2006, the Commission submitted its first report, titled “Review of the Corporate Insolvency Law and Recommendations for the Amendment of Part V of the Companies Law”, together with a draft Bill, to the Hon. Attorney General for consideration. The report recommended that the existing law, which was considered unduly complex and out of date, be amended by rewriting Part V of the Companies Law (2004 Revision).
Following further consultation and consideration of stakeholder views, the Commission carried out further review of its recommendations.
In July 2007, the Commission issued a supplemental final report, titled “Review of the Corporate Insolvency Law and Recommendations for the Amendment of Part V of the Companies Law”, containing revised recommendations, together with a revised draft Companies (Amendment) Bill 2007. The recommendations aimed at improving the law on how companies are wound up, including setting out existing law and practice clearly in legislation and establishing a framework better suited to the Cayman Islands. The reforms included –
- repealing and replacing Part V of the Companies Law (2004 Revision);
- setting out existing law and practice clearly in legislation;
- establishing an Insolvency Rules Committee to develop detailed rules for how insolvency cases are handled; and
- improving international cooperation in cross-border insolvency matters.
