At RHSW we understand the need to deliver timely, efficient and effective services to stakeholders.
Our team of insolvency practitioners and qualified accountants has great depth of experience in dealing with distressed situations and the associated complexities of cross-border insolvencies and disputes. Typically we manage, either as directors or insolvency practitioners multi-faceted litigations, complex asset disposals and relationships with multiple service providers and a wide range of stakeholders.

We also have the ability to draw upon the expertise of, and engage specialists through, affiliated entities of the Rawlinson & Hunter Cayman Islands and BVI offices, as well as the global networks of Rawlinson & Hunter and Smith & Williamson. This includes fund fiduciary, trust, corporate, accounting and fund administration professionals. These related entities also hold relevant financial industry licences and are fully licensed by the regulators of their respective jurisdictions, holding us to the highest regulatory standards.

At RHSW we understand the need to deliver timely, efficient and effective restructuring services to stakeholders, while satisfying all statutory, fiduciary and legal responsibilities placed upon us. Our hands-on and commercial approach, partnered with our significant experience in dispute resolution has consistently led to superior results and returns for stakeholders.

RHSW can assist in a broad variety of situations in the Cayman Islands and the BVI, as well as other common law jurisdictions in the Caribbean region. Our core services are as follows:

(Official) liquidations

RHSW Caribbean has a dedicated team of qualified insolvency practitioners and accountants who serve as court appointed fiduciaries and (official) liquidators where an entity is wound up under the supervision of the respective courts of the Cayman Islands and the British Virgin Islands (the “Court”).

These appointments typically result following the presentation of a winding up petition (or application for the appointment of a liquidator) against a company or partnership by a petitioner, such as an unpaid creditor, investor or in certain cases the company or its directors. Supervision of the Court can also be granted when the directors of a company that is in voluntary (solvent) liquidation are unable to swear a declaration of solvency. The appointment is usually granted on the basis that the entity is insolvent.

As part of a typical liquidation, RHSW will look to perform some, if not all, of the following procedures:

  • determining the reasons for the entity becoming insolvent
  • investigating unusual, erroneous or fraudulent transactions
  • identifying, securing and recovering assets
  • selling and distributing assets
  • investigating claw back claims
  • facilitate ongoing dialog with creditors and investors
  • recovering overpaid fees
  • depending on the situation, restating the Net Asset Value of a fund

Voluntary liquidation

RHSW has a dedicated team of voluntary liquidation professionals who complete a significant number of assignments per annum. Our fixed fee structure allows directors and fund managers to have full visibility on closure costs for their company/partnership. The voluntary liquidation process can also be completed in as little as six weeks where a company/partnership has no remaining assets or liabilities.

In the Cayman Islands, under the Companies Law (2013 Revision) and the Exempted Limited Partnership Law (2013 Revision) a company or partnership may be wound up or voluntarily liquidated:

  • upon the expiration of a fixed period as defined in the Memorandum and Articles of Association(“MAA”)
  • upon the occurrence of a specified event as defined in the MAA or Partnership Agreement
  • if all general partners and a two-thirds majority of partners resolve that it be wound up
  • if the company resolves by special resolution that it be wound up
  • if the company in general meeting, resolves by ordinary resolution, that it be wound up
    Voluntarily because it is unable to pay its debts as they fall due

In the BVI, under the BVI Business Companies Act 2004, a company may be voluntarily liquidated provided either (a) it has no liabilities or (b) it is able to pay its debts as they fall due and the value of its assets equals or exceeds its liabilities.

A core requirement for a liquidation to continue voluntarily is the ability for all the company’s directors to sign a declaration of solvency, confirming the company’s ability to pay its debts in full plus interest for a period not exceeding 12 month from the commencement of the liquidation.

Voluntary, or solvent, liquidations are also undertaken for a number of reasons, such as:

  • A way to resolve a shareholder dispute and ensure that all creditors and shareholders are treated fairly under the guidance of a qualified professional
  • A more cost effective way to dissolve a solvent company that is suffering from distress
  • A risk adverse method to wind down a company or fund that has reached the end of its useful life and
  • A way of “trimming down” a corporate or fund structure, particularly after an acquisition

In addition to the various statutory obligations the voluntary liquidator’s primary role is to realise the assets of the company/partnership, advertise for creditors’ claims, pay all known liabilities and to ensure that stakeholders are treated equally in accordance with their entitlement.

Provisional liquidation

RHSW team members have acted as provisional liquidators in both contentious and investigatory capacities and also as supervisors to promote financial restructurings.

Provisional liquidation is a court process which provides a moratorium on the enforcement of claims against the company for a set period of time. The process is similar to the initial stages of a Chapter 11 motion in the US or Administration in the UK, in that it provides a window of time for the Company to restructure, refinance or reorganise assets outside of a liquidation process by affecting a stay on all proceedings against the company.

In the case of the Cayman Islands, the company is required to file a winding up petition with the Cayman Court. The petition is normally adjourned (pending the outcome of the provisional process) and, should a restructuring be successful, can be dismissed at a later date if required.

In the BVI, an application for provisional liquidation needs to be made to Court and will only be granted if the company consents or if the assets are deemed to be “at risk”. The powers of the provisional liquidator will be governed by the court order which will include, amongst other powers, the protection of the value of the assets.

The role of the provisional liquidator can be to oversee the refinancing / restructuring / reorganisation and to determine whether or not the company has the ability to return to trading as a going concern. Provisional liquidation can also be used as an investigatory tool where the Court may require independent fiduciaries to review the business of the company and any accusations of wrongdoing. Provisional liquidation is becoming more popular as a restructuring tool and it has been used in a number of cross jurisdictional cases where a US entity enters Chapter 11 and its Cayman parent entity is placed into provisional liquidation.

Receiverships and administrative receiverships

We are able to act, and have experience acting, as receivers under the powers contained in charging documents held by secured creditors. For specific asset recovery and realisation this can often be the quickest and most cost effective way for a secured creditor to recover value, as it is their contractual entitlement following an event of default and enforcement.

In the BVI, secured creditors who hold a floating charge (provided it is valid under BVI law) over all, or substantially all, of the business, assets and undertaking of a company are able to appoint an administrative receiver. Unlike a receiver, an administrative receiver is entitled to take control over the whole business and all of its assets to recover value in them for the benefit primarily of the secured creditor and, if there are any, the preferential creditors.

Business and liquidity reviews

We assist stakeholders by conducting reviews of the financial position of borrowers, in order to understand and analyse the health of the business and the drivers of profitability and cash flow. Our work provides lenders with an independent and detailed view as to the profitability and liquidity of their client, and the client’s ability to continue operating as a going concern.

We review the current operations and financial position of the borrower in order to provide insight into the borrower’s debt capacity. Our review will provide a basis to assist a lender in determining the future lending strategy it will employ with the borrower by:

  • Assessing the current financial position (focusing on balance sheet, profit & loss and cash flow
  • Highlighting any short-term funding that may be required
  • Reviewing the accuracy of financial projections to date, understanding future performance based on projections and identifying weaknesses in projections
  • Analysing the borrower’s competitive market by identifying and comparing performance with peers.
  • Providing detailed options to the lender / borrower which may include financial restructuring and /or operational restructuring.

These reviews can also be of great assistance to the directors of the company itself. Business reviews are increasingly commissioned by directors to assist in identifying opportunities for turnaround or new sources of funding.

Options analysis and contingency planning

We provide advice to corporates and stakeholders on the options available to a business which is in financial distress, covering both consensual and non-consensual routes. This can be a means to drive a solvent restructuring solution or to properly plan for the implementation of an insolvency route.
The advice would cover the following aspects (as appropriate):

  • Review of the group structure, including associated debt and security, to identify jurisdictions, asset holding entities, inter-connectivity and guarantees
  • Review of (or assistance in developing) the company’s consensual restructuring plan and assistance to directors to allow them to negotiate such a plan with creditors
  • Identification of the non-consensual (enforcement) routes available to a company and/or its stakeholders
  • Stakeholder analysis identifying the parties affected by any proposed restructuring, the impacts on such parties and steps to mitigate such impacts and
  • Implementation planning should an insolvency route be required.

Carrying out such analysis and proper planning assists stakeholders in understanding their options and enables directors to continue to meet their fiduciary duties.

Restructuring director

As corporates and funds continue to deal with issues that arose from the liquidity crisis of 2008, such as portfolio illiquidity, suspended redemptions, restructuring gates, redemptions-in-kind and side pockets, the pressure on funds and their service providers to deliver workable solutions for investors has never been greater.

Our team of restructuring professionals has the knowledge and experience to take an appointment as director of a company / fund in a distressed situation and greatly assist in the soft wind-down process. These situations can arise for a number of reasons, including:

  • Investors wanting to realise value quickly and have a differing agenda to the Investment Manager
  • A breakdown in trust between the Investors and the service providers and/or
  • The current directors are not comfortable working with a distressed fund

A soft wind down facilitates action by detailing and implementing a strategy that optimises the realisation of the fund’s investments for the benefit of all investors. Soft wind-downs are also less prescribed and typically less costly than a formal liquidation. They also provide for the continued existence and operation of the fund once the issues have been resolved, if appropriate.

Combining the knowledge and experience of our restructuring team with our fund fiduciary and trust & corporate professionals, we are well placed to assist and can provide the following:

  • General advice for funds, investors and service providers on matters relating to the disposition of illiquid assets
  • Design of a soft wind down strategy for funds, including convening an ad-hoc committee of investors and / or stakeholders to consider varying views
  • Accepting appointment as director(s) of the fund in order to execute the wind-down strategy and
  • Introduction to alternative service providers, including investment managers who specialise in distressed situations

Liquidating trustee

Through our affiliates and their underlying subsidiaries, we have the ability to take on trustee appointments in distressed situations by utilising their expertise and licence under the Banks and Trust Companies Law. These situations can commonly occur when a fund is structured via a feeder fund and a master unit trust and there is a need for soft wind down by trustees, agents or directors.

RHSW also has significant experience acting as trustees and directors of CDO, CLO and RMBS issuer structures, where there is a requirement for a “conflict-free” service provider to pursue and oversee litigation.

Operational turnaround

Operational turnaround is the element of a restructuring that shifts focus from financing the business, to the business itself.

We work with management to improve productivity, by analysing the systems and processes and work with key employees to improve their performance as a team.

Maintaining operational performance can be challenging within tightened or constrained financial boundaries. Operational turnaround seeks to improve performance by getting more for less. More can mean improved customer service, reduced costs, streamlined operations. This service offering seeks to address areas which can increase profitability without the need for financial outlay.

Areas which we would advise on as part of this service are as follows:

  • The strategic options available to the business to ensure its survival
  • Assistance in the preparation and implementation of a comprehensive plan
  • Assistance in the sale or wind-down of distressed or non-core segments of the business
  • Liaising with creditors and their advisers and
  • Assistance with the company’s negotiation with its lenders and possibly seeking alternative sources of finance.

Due diligence

Vendor (and buyer side) due diligence provides a detailed report on the financial position of a company for sale. Working closely with your business (or the target), we identify and resolve issues in the divestment process to provide a detailed due diligence report which will enable management to retain control of the transaction process while reducing disruptions to the on-going business.

Our aim is to address the concerns and issues that may be relevant to even the most demanding purchaser. Our team will produce a product which is tailored to your needs and the specific needs of your bidders, including insights on financial (historic and projected), tax, operational, commercial, strategic, and pension and human resources topics.

Our due diligence team will:

  • Provide vendors with increased control over the sale process and the timing of sale
  • Provide purchasers with greater certainty over the nature of the business and the characteristics of its cash flow. This can assist with gearing decision which purchasers may need to consider
  • Reduce the involvement of senior management in the sale process and reduced disruption to operations as sale management is separated from the business process
  • Reduced time spent with buyer queries, as buyers will be able to rely on the vendor due diligence report
  • Identify critical issues at an early stage in the sales process, enabling companies to solve problems before they are recognised by buyers
  • Facilitate rapid execution of the sale from the date of announcement and
  • Reduce uncertainty by providing detailed independent information, potentially justifying higher offers

Dispute resolution - arbitration

On 2 July 2012 the Cayman Islands introduced The Arbitration Law, 2012. This law replaced The Arbitration Law (2001 Revision) which was largely based on the English Arbitration Act 1950 and which had become outdated.

This law has improved the attraction of the Cayman Islands as a venue for arbitration, both for local and international parties.

The law is based on the UNCITRAL Model Law and draws on the arbitration laws of other common law jurisdictions including the United Kingdom. The law is founded upon three fundamental principles:

  • The fair resolution of disputes by an impartial tribunal without undue delay or expense
  • The freedom of parties to agree how their disputes are resolved, subject only to such safeguards as are necessary in the public interest and
  • Limiting the scope for court intervention in arbitration proceedings. The arbitrational tribunal has wide ranging powers to award any remedy of relief available from Court proceedings

The BVI passed a new Arbitration Act in late 2013 which is similarly based on the UNCITRAL Model Law and will modernise the use of arbitration in the jurisdiction. The law is expected to come into force in 2014.

Arbitration, as a binding and enforceable method of dispute resolution, is capable of offering significant advantages over traditional litigation in number of areas:

  • Awards made by an arbitral tribunal pursuant to an arbitration agreement are final and binding upon the parties. With Court permission, they are capable of being enforced in the same way as a judgment or order of the Court. However, the Arbitration Law 2012 limits the circumstances in which it is possible to appeal an arbitral award. Indeed, should the parties be minded to do so, they can agree to completely remove the limited right of appeal
  • The new legislation stipulates that arbitral proceedings shall be conducted privately and confidentially. No public record of arbitral proceedings, no public statements of the parties’ respective positions, nor any public hearings or reported judgments will exist. Arbitrational processes will be conducted entirely as in private. Confidentiality is protected by the law
  • As a result of the widespread acceptance of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, to which the Cayman Islands (through the United Kingdom) is a signatory, it is often easier to enforce an arbitral award across national borders than it is to enforce a Court judgment or order