The Grand Court of the Cayman Islands has made an important ruling in relation to the failed Weavering Fund, which sets an important precedent for helping ensure all creditors of an insolvent company are treated equally.
The Grand Court of the Cayman Islands has ordered that redemption payments made to an investor of the failed Weavering Macro Fixed Income Fund prior to the commencement of its liquidation are to be repaid.
The court ruled that the redemption payments constituted preferences and were therefore invalid. In doing so, the court has ordered that the redemption payments, which totalled more than $8.2m, be repaid to the fund.
The decision, handed down earlier today, represents the first successful attempt by liquidators of a Cayman Islands investment fund to recover redemption payments on the basis of preference, meaning that the payments were made at a time when the fund was insolvent and made with a view to giving the investor a preference over the fund's other creditors.
Shaun Folpp, partner at law firm Mourant Ozannes, who acted for the fund's liquidators, said: “The court's ruling confirms that redemption payments paid to investors are not immune from recovery by liquidators, including where those investors invest in the fund as a nominee or custodian, where the payments are preferential in nature.
“The court's decision reinforces the general rule that all creditors of an insolvent company ought to be treated equally.”
The proceedings, brought by the fund's liquidators, Ian Stokoe and David Walker (and more recently Simon Conway) of PwC Corporate Finance and Recovery (Cayman), are part of wider steps currently being taken to recover assets of the fund for the benefit of all creditors.
Shaun Folpp, Mourant Ozannes, Ian Stokoe, David Walker, PwC Corporate Finance and Recovery, Cayman