Cayman Finance Update

Cayman Finance Update

Shifting sources of law on recharacterizing debt as equity

Since debt enjoys priority of payment in insolvency proceedings, demoting a debt claim to the lower rank of an equity interest likely means a total loss for the distressed investor. 

 

Extraterritorial limits of the long arm of US bankruptcy law

The international reach of U.S. bankruptcy law might well be regarded as imperialistic. As to any debtor who satisfies the broad eligibility qualifications, a U.S. bankruptcy proceeding encompasses all rights in property of the debtor, “wherever located and by whomever held."

 

Cayman hedge fund liquidators welcome

Forum shopping, or to put it more diplomatically, careful forum selection, is absolutely essential to the effective pursuit of remedies in US Bankruptcy Courts. Another recent decision regarding a Cayman hedge fund seeking – and this time receiving – cooperation from a US Bankruptcy Court illustrates ...

Delaware decisively ousts New York as friendliest US cross-border insolvency venue

Why would a debtor with no assets in the United States seek cooperation from a U.S. bankruptcy court in cross-border insolvency proceedings?  

 

Sui generis maximus: Power over UK persons for “special” US bankruptcy claims

Lawyers often seem too clever in arguing legal niceties to help clients avoid responsibility. Sometimes, though, a lawyer is hoisted with his own petard as a court fashions new super-niceties to reflect modern developments and undercut long-established rules.

Appreciating the remaining risks of bankruptcy strip-off of home mortgages

Investments in mortgage-backed debts carry reduced risk in light of the special protections afforded to collateralized claims. Second-lien investing, however, is subject to enhanced risk due to the greater likelihood of collateral value insufficiency.   

 

The alternative to bankruptcy is not payment, but waste, uncertainty and chaos

The only people who complain about insolvency proceedings more bitterly than creditors . . . are creditors’ lawyers. The recent case of the developer Al-Murjan points to a revival of the bankruptcy law in the United Arab Emirates, and even though that law is not known to be “debtor-friendly”...

Leveraging confusion over power allocation in the US bankruptcy system

One of the last places a hedge fund manager or client wants to be is on the business end of a lawsuit by a US bankruptcy trustee or DIP. Suits by the trustees of fraudulent or failed investment schemes and collapsed LBO deals to recover pre-bankruptcy payments as “fraudulent conveyances” or “preferences” continue to captivate media attention.