A Cayman Islands scheme of arrangement is a court approved compromise or arrangement between a company and its creditors or shareholders (or classes thereof). A scheme of arrangement is frequently used to implement a financial restructuring by varying or cramming in the rights of the relevant creditors and/or shareholders of a company but may also be used to complete corporate transactions such as a group restructuring or reorganisation, acquisitions, mergers and take-private transactions.
Traditionally, the Cayman Islands Companies Act has only afforded companies the ability to make an application to the Court under section 86 for the sanctioning of a scheme of arrangement. However, with the introduction of the new restructuring officer regime in Part V of the Companies Act, which also applies to exempted limited partnerships, general partners of exempted limited partnerships are now able to seek the appointment of restructuring officers who can then seek the sanctioning of a compromise or arrangement between the partnership and its creditors and/or limited partners.
With the increasing use of the restructuring officer regime in the Cayman Islands, it is only a matter of time before the first exempted limited partnership utilises it to sanction a scheme of arrangement. If you require legal advice on any offshore restructuring related issues, or any other Cayman Islands or BVI legal issues, please contact any of the following individuals on the Insolvency and Dispute Resolution team.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.