Foreign Bankruptcy Proceedings (International Co-operation) Rules, 2018 (SL 92 of 2017)

Summary

These are procedural rules made by the Insolvency Rules Committee under section 155(1) of the Companies Law, governing how applications and notices under Part XVII of the Companies Law (which deals with recognition of and assistance to foreign bankruptcy/insolvency proceedings) are to be brought before the Grand Court.

They set out the procedure for a foreign representative to obtain a declaration recognising their authority to act on behalf of a debtor, and for obtaining further relief once recognition has been granted, such as injunctions, stays of enforcement, examination orders and turnover-of-property orders. The Grand Court Rules 1995 apply to these proceedings except where inconsistent, and no security for costs can be ordered against a foreign representative on a section 241 application, subject to Court of Appeal powers.

Disclosure Obligation

The rules also impose a distinct disclosure obligation on Cayman Islands companies, whether incorporated under Part II or registered under Part IX of the Companies Law, that become subject to a foreign bankruptcy proceeding. The company's liquidator, or its directors if no liquidator is appointed, must file a notice with the Registrar of Companies, together with supporting certified documents (and an English translation if needed), and that notice must in turn be published in the Gazette.

• Prescribed forms: Annexed forms cover petitions and orders including the Recognition Order, Injunction, Stay of Enforcement, Examination Order and Turnover of Property Order, as well as the Notice of Foreign Bankruptcy Proceedings filed with the Registrar.

This is primarily a court-procedure instrument for insolvency practitioners, foreign representatives and their counsel, but it creates a concrete compliance trigger for any Cayman company caught up in a foreign insolvency: a notice must be filed and published within specified timeframes.

Key obligations

• A foreign representative applying under section 241(1)(a) for a declaration of authority to act on behalf of a debtor must proceed by petition, which must be advertised, state prescribed particulars (debtor's incorporation, business, appointing court, representative's powers/duties, reasons for the order), and be verified by the representative's affidavit supported by an affidavit of foreign law.
• A declaratory order made under section 241(1)(a) must be published in the Gazette within 7 days of the order being made (and in any other publication the Court directs).
• An application for further relief under section 241(1)(b)-(e) (after recognition has been obtained) must be made by summons served on every respondent, supported by an affidavit setting out why the respondent is a 'relevant person' and the reasons for seeking the order.
• Examinations conducted under an order must be held in private, conducted by question and answer, recorded and transcribed by a court reporter, and conducted under oath, with the examinee entitled to have counsel present (subject to limits) and required to answer questions subject to privilege/self-incrimination claims.
• Where a Cayman company incorporated under Part II or registered under Part IX of the Companies Law becomes subject to a foreign bankruptcy proceeding, its liquidator (or directors, if none is appointed) must file a Form 6 notice with the Registrar of Companies, with a certified copy (and English translation if applicable) of the document evidencing the foreign proceeding, within 14 days of the commencement of the foreign bankruptcy proceeding.
• The Form 6 notice (without annexures) must be published in the Gazette not later than 21 days after it was filed with the Registrar.

Applies to

companies incorporated under Part II of the Companies Law, companies registered under Part IX of the Companies Law, foreign representatives in bankruptcy proceedings, liquidators, directors of companies subject to foreign bankruptcy proceedings

Deadlines

• within 7 days of the making of the declaratory order: A recognition/declaratory order made under section 241(1)(a) must be published in the Gazette.
• within 14 days of the date upon which the foreign bankruptcy proceeding commenced: The company's liquidator, or its directors if no liquidator is appointed, must file the Form 6 Notice of Foreign Bankruptcy Proceedings with the Registrar of Companies.
• not later than 21 days after the date on which the notice was filed with the Registrar: The Form 6 notice (without annexures) must be published in the Gazette.