The Court had previously ordered that the Company be placed into provisional liquidation to allow the joint provisional liquidators, Mr. Alexander Lawson and Mr. Christopher Kennedy of Alvarez & Marsal Cayman Islands Limited, and Ms. Tiffany Wong of Alvarez & Marsal Asia Limited (the "JPLs") to determine whether or not a restructuring of the Company deserved further consideration, or whether a winding up order should be made. The Company argued that there were sufficient grounds to provide for a further adjournment of the petition, relying upon the JPLs' findings that a restructuring remained viable. This position was also supported by another creditor of the Company.
The Court concluded that a further adjournment of the petition for a period of four months was in the ultimate interests of the Company's stakeholders, noting that "there was no immediate tangible benefit in granting a Winding Up Order and that there was credible evidence before the Court that there is a reasonable prospect that the Petitioner's debt would be paid within a reasonable time." In delivering the Reasons for Judgment, Justice McMillan focussed on the two particular issues of law identified above.
1. The Standing of a Secured Creditor to Petition
Justice McMillan noted that the question of a secured creditor's standing to present a winding up petition had not previously been dealt with by the Grand Court. In making his finding on this issue, Justice McMillan accepted that a secured creditor has standing to petition for the winding up a company in the Cayman Islands, and to the extent that the secured creditor's security is relevant, its relevance would be as to weight rather than to standing.
2. The Principles Governing the Adjournment of a Winding Up Petition
The four month adjournment was granted on the basis that the Court found there was a reasonable prospect that the petitioner's debt would be paid within a reasonable period of time, and conversely, there was no immediate tangible benefit to winding up the Company. In coming to this conclusion, Justice McMillan observed that the views of the secured petitioner were counterbalanced by the views of the other creditor and those of the JPLs, who both saw merits in an adjournment being granted. The Company itself was also seeking an adjournment. Whilst the ultimate success of the petitioner's debt being repaid pursuant to the proposed refinancing could not be guaranteed, the situation was deemed to be sufficiently promising for it to be examined further.
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