{"id":513,"date":"2013-03-01T19:59:52","date_gmt":"2013-03-01T19:59:52","guid":{"rendered":"https:\/\/www.campbellslegal.com\/?p=513"},"modified":"2014-11-06T19:27:12","modified_gmt":"2014-11-06T19:27:12","slug":"amendments-companies-winding-rules-2008","status":"publish","type":"post","link":"https:\/\/www.campbellslegal.com\/client-advisory\/amendments-companies-winding-rules-2008-513\/","title":{"rendered":"Amendments to the Companies Winding Up Rules 2008"},"content":{"rendered":"

Listing of Hearings<\/h2>\n

Previously under the Rules, the Registrar would fix a date for hearing of the petition upon presentation. The Amendment now requires any petitioner (whether creditor (O.3, r5), contributory (O.3, r11(2)) or Authority O14, r.14(1)) to apply in writing (by letter or e-mail) to the Registrar to have the proceedings assigned to a Judge and a hearing date fixed before the petition may be presented.<\/p>\n

A petition will not be accepted for filing unless and until the proceeding has been assigned to a Judge and a hearing date fixed and endorsed on the petition. The Court\u2019s expectation is that the proceeding will be assigned to a Judge and a hearing fixed within 24 hours of the Registrar receiving the documents.<\/p>\n

This amendment reflects the practice of the Financial Services Division that a specific Judge be assigned to each case and that each Judge manages their own cause list. It is also intended to allow winding up petitions and summonses for directions (where required) to be served, with hearing dates, on the same day that they are filed.<\/p>\n

The Amendment also requires any application made by or relating to the liquidation committee under Order 9 to be made by way of a\u00a0letter to the assigned Judge, with a supporting affidavit (O.9, r.9).<\/p>\n

Reconstitution of the Liquidation Committee<\/h2>\n

In circumstances where, during the course of a liquidation, the official liquidator changes his certification of the company\u2019s solvency or insolvency, the Amendment (O.9, r.3) allows the official liquidator to reconstitute the liquidation committee, automatically removing creditors or contributories as appropriate. The official liquidator shall then convene a meeting of creditors or contributories, as the case may be, for the purpose of electing new members to the liquidation committee.<\/p>\n

This amendment ensures that the liquidation committee reflects those with an economic interest in the conduct of the liquidation. Previously under the Rules there was no specific provision allowing such a reconstitution of the liquidation committee.<\/p>\n

In addition, O.9, rr.1 and 2 seem to have removed the power of the Court to direct that a liquidation committee be constituted with fewer members than prescribed by O.9, r.1(3). Previously, O.9, r.1(7)(b) specifically conferred a power on the Court to direct that a liquidation committee be established with fewer members or with a different combination of creditors and contributories than prescribed. That provision has been deleted by the Amendment. Similarly, O.9, r.(2)(1) was previously qualified by reference to Rule 1(7)(b). That qualification has also been removed by the Amendment.<\/p>\n

Sanction Applications<\/h2>\n

O.11, r.3(3) introduces a new provision in respect of sanction applications which are concerned with substantive rights between any class of creditors or contributories. The Amendment confers upon the Court a power to make a representation order in respect of the different classes of creditors and contributories. The Court has previously made such orders relying on section 18(2) of the Grand Court Law (1995 Revision).<\/p>\n

The Amendment also allows the Court to limit or exclude the official liquidator from those proceedings. This replaces the official liquidator\u2019s right to be heard on every sanction application, provided previously by O.11, r.3(2) of the Rules.<\/p>\n

Applications for Supervision Orders<\/h2>\n

The Amendment introduces the requirement that the Judge may only dispense with an application for a supervision order without a hearing if he is satisfied that notice of the petition has been given to creditors (or shareholders if solvent) and there is no reason to believe that any creditor (or shareholder if applicable) objects to the appointment of the voluntary liquidator as official liquidator.<\/p>\n

In any other case, the voluntary liquidator must, in addition to the requirement to advertise the hearing of the petition, give notice to the creditors (or shareholder if applicable) in whatever manner is likely to bring the hearing or the petition to their attention. Previously, service on shareholders was required in accordance with the requirements of the Articles of Association.<\/p>\n

Transfer of Shares<\/h2>\n

The Amendment introduces a new Part II to Order 19 dealing with applications for the validation of a transfer of shares under section 99 of the Companies Law (2012 Revision).<\/p>\n

O.19, r.4 allows an application for a validation order to be made either by the liquidator, the transferor or the transferee. In circumstances where the shares are fully paid up and the liquidator does not object to the transfer the application may be made by letter to the assigned Judge, together with an affidavit verifying that the shares are fully paid up and the liquidator has no objection.<\/p>\n

If the liquidator objects to the transfer, the transferee or transferor may apply for the validation order by summons, with that summons being served upon the liquidator. A supporting affidavit is required to explain the circumstances of the transfer and any response to the liquidator\u2019s objections.<\/p>\n

Official Liquidator\u2019s Lawyers<\/h2>\n

Previously, the Rules provided for official liquidators to retain attorneys without leave, but the Amendment requires the official liquidator to seek sanction to retain attorneys (and foreign lawyers), which is consistent with the requirements of Paragraph 11 of the Third Schedule to the Law.<\/p>\n

The Amendment also provides (O.25, r.1(4)) that an official liquidator shall not retain a foreign lawyer without written terms of engagement which expressly state that the contract is governed by Cayman Islands\u2019 law, the lawyer submits to the exclusive jurisdiction of the Court in connection with the engagement, that the fees payable will be subject to taxation in accordance with O.25, r.3(1) and that the lawyer has no right to exercise any lien over files as against the official liquidator.<\/p>\n

O.25, r.1(4) provides that any engagement of a foreign lawyer which is inconsistent with Order 25 will be void and of no effect. These requirements do not affect the validity of any engagement letter entered into prior to the commencement date of the Amendment.<\/p>\n

Other amendments are as follows:<\/h2>\n