In the background to these proceedings, a former investor in one of the Company’s segregated portfolios averred that he had good arguable claims against the Company for actionable misrepresentations which had induced him to invest. He therefore brought two applications, in each case designed to ensure that his interests were adequately protected and that the voluntary liquidator (who was also the sole management shareholder and director of the Company, and the person responsible for its investment strategies) be properly held to account for his actions. Those applications were:

• An application to defer the dissolution of the Company upon the completion of its in voluntary liquidation under section 151(3) of the Companies Act (the Act).
• A petition under section 131(b) of the Act to bring the voluntary liquidation under the supervision of the Court.

Both applications failed, the Court ultimately concluding that:

1. the allegation that the voluntary liquidation of the Company had lacked transparency and accountability, itself lacked substance;
2. the proceedings were abusive and that the former investor’s real objective was to leverage a position of advantage in his personal claims against the voluntary liquidator personally, rather than the Company (which had no remaining assets);
3. the former investor had redeemed his shares without demur two months prior to the commencement of the voluntary liquidation and no longer had standing to petition to wind up the Company. He had no remaining proprietary interest in the Company whose dissolution he wished to defer. There was no apparent basis upon which his claim could be regarded as recovering assets belonging to the Company;
4. the underlying claims against the Company were merely speculative, being based on his own purported understanding of representations not apparently shared by other investors;
5. the former investor’s objectives would be anathema to the statutory rationale for deferral of dissolution and could fairly be described as “shadowy”, with his pleadings “patently lacking in merit”; and
6. any claims against the voluntary liquidator personally would not depend on the grant of relief by the Grand Court. Court process in the Cayman Islands should not be allowed to be used as a means for exerting undue pressure.

In the following costs judgment, the Court granted the voluntary liquidator’s application for indemnity costs, having carefully considered the underlying decision and noting in particular the findings summarised at paragraphs (ii), (iii), (v) and (vi) above which amounted to plainly improper and unreasonable conduct to a high degree such as to attract the Court’s disapproval by way of an indemnity costs order.

Harneys acts for the voluntary liquidator.

This blog was also written by paralegal Anita Warhurst.