The Cayman Islands Court of Appeal has dismissed an appeal brought by a former investor in the failed Weavering Macro Fixed Income Fund (Weavering or Fund) against an order requiring it to re-pay over $8 million in redemption proceeds it received shortly prior to the Fund's collapse.
The proceedings brought by Weavering's liquidators, originally Ian Stokoe and David Walker, and now Simon Conway and Jess Shakespeare, of PwC, against Skandinaviska Enskilda Banken (SEB) sought the return of redemption proceeds paid to SEB on the basis that they represented preferences over Weavering's other creditors.
At first instance Justice Clifford found in favour of the liquidators, and ordered SEB to repay the redemption proceeds, in full. In a written decision handed down today, the Court of Appeal re-affirmed the preferential nature of the payments, and again rejected a number of defences put forward by SEB.
Mourant Ozannes partner Shaun Folpp, who acted for Weavering's liquidators, said: "The Court of Appeal's decision is to be welcomed, and reinforces the policy behind much of the Cayman Islands' insolvency regime, which is to restore value to a company for the benefit of its creditors.”
The first instance proceedings marked the first successful attempt by liquidators of a Cayman Islands investment fund to seek the return of redemption proceeds paid to an investor on the basis of preference.
Additional proceedings are now also on foot against other investors seeking the return of a further $82 million of redemption payments made by Weavering in the months leading up to its failure.
Weavering collapsed in March 2009 following the discovery of the fraudulent trading activities of its principal investment manager, Magnus Peterson, including his use of Swap transactions with a related party, Weavering Capital Fund, the effect of which was to hide huge losses which Weavering was suffering.
Peterson is now serving 13 years imprisonment as a result of his fraud.
Cayman Islands Court of Appeal, Cayman Islands, Mourant Ozannes, PwC, Weavering Capital Fund, Weavering, Funds