Insolvency Practitioners' Regulations (2023 Consolidation)

Summary

This is the consolidated (as at 31 December 2022) version of the Insolvency Practitioners' Regulations, made under the Companies Act, which govern who may be appointed by the Grand Court as an official liquidator of a company and how such a liquidator's remuneration is set and approved.

Eligibility Requirements

• Professional qualification: Anyone accepting appointment as official liquidator must be a licensed insolvency practitioner in a listed relevant country, or a qualified accountant meeting experience/hours thresholds.
• Other requirements: Applicants must also meet residency, independence and professional indemnity insurance requirements.
• Relaxations: Limited relaxations apply for foreign practitioners appointed jointly with a qualified local practitioner.

Remuneration Approval Regime

• Court approval required: An official liquidator cannot be paid from company assets without prior Court approval, subject to an 80% interim payment-on-account mechanism.
• Prior consideration: The proposed basis and amount of remuneration must first be considered by the liquidation committee, or a creditors'/contributories' meeting, or an approved international protocol.
• Application support: Any Court application for remuneration must be supported by a report and accounts, an affidavit, and the remuneration agreement documentation.
• Prescribed rates: Part IV and the Schedule prescribe minimum and maximum hourly rates by staff grade and maximum percentage rates for distribution- or realisation-based remuneration, which must be renegotiated annually.

The regulations apply prospectively from a stated commencement date, preserving the validity of prior appointments and remuneration agreements made before that date even if they would not otherwise comply. The audience for this document is primarily official liquidators, insolvency practitioners, liquidation committees and their advisers involved in Cayman Islands compulsory or provisional liquidations, rather than CIMA-licensed financial institutions generally.

Key obligations

• A person may only accept Court appointment as official liquidator if licensed as an insolvency practitioner in a specified relevant country, or qualified as a professional accountant with an approved institute holding at least 5 years' relevant experience and 2,500 chargeable hours of relevant work.
• An official liquidator (other than a foreign practitioner appointed jointly) must be resident in the Islands and hold (or work for a firm/company holding) a trade and business licence authorising insolvency practice.
• An official liquidator must not be someone who acted as the company's auditor within the 3 years preceding commencement of the liquidation, to satisfy the independence requirement.
• An official liquidator must maintain professional indemnity insurance of at least US$10 million per claim and US$20 million in the aggregate, with a deductible of no more than US$1 million.
• An official liquidator may not receive remuneration from company assets without prior Court approval, and any interim payment on account must not exceed 80% of the remuneration sought; any excess paid must be repaid immediately if the Court approves a lower amount.
• Before applying to the Court for remuneration approval, the official liquidator must first obtain the liquidation committee's approval (or, absent a committee, convene a creditors'/contributories' meeting or comply with an approved international protocol) and prepare a report and accounts justifying the proposed basis and amount of remuneration.
• Where remuneration is to be based on a percentage of distributions or realisations, the official liquidator must apply to the Court for approval of the basis of remuneration within the later of 6 months from establishment of the liquidation committee or 9 months from commencement of the liquidation.
• Hourly rate-based remuneration agreements must stay within the minimum and maximum hourly rates prescribed in Part A of the Schedule, and the agreed scale must be reviewed and renegotiated annually with effect from 1 January each year.
• Percentage-based remuneration (distributions or realisations/recoveries) must not exceed the maximum percentage rates prescribed in Part B of the Schedule.
• An official liquidator must not delegate work to a related or other insolvency practitioner firm except under a Court-approved remuneration agreement complying with the Regulations.

Applies to

official liquidators, qualified insolvency practitioners, foreign practitioners appointed as official liquidators, liquidation committees

Deadlines

• 6 months from the date a liquidation committee is established, or 9 months from the date of commencement of the liquidation, whichever is later: Deadline for an official liquidator remunerated on a percentage-of-distribution or percentage-of-realisation basis to apply to the Court for approval of the basis of remuneration.
• annually with effect from 1st January each year: Agreed scale of hourly rates for time-spent remuneration must be reviewed and renegotiated.

Related documents

• Insolvency Practitioners' Regulations (2026 Consolidation) replaces this document
• Insolvency Practitioners (Amendment) Regulations, 2024 (SL 12 of 2024) amends this document