Re Founding Partners Global Fund Ltd ((in Liquidation))

• Jurisdiction: Bermuda
• Judgment Date: 29 July 2009
• Date: 29 July 2009
• Docket Number: Commercial Jurisdiction 2009 No. 190
• Court: Supreme Court (Bermuda)

In The Supreme Court of Bermuda

Commercial Jurisdiction 2009 No. 190

In the matter of the liquidation of Founding Partners Global Fund Ltd

And in the matter of a Letter of Request of the Grand Court of Cayman dated 16 June 2009

Mr M Diel for the Caymanian Joint Provisional Liquidators

The following cases were referred to in the judgment:

Re Impex Services Worldwide Ltd [2004] BPIR 564

Cambridge Gas Transportation v Official Committee of Unsecured Creditors of Navigator Holdings plcELR [2007] 1 AC 508

McGrath v RiddellUNK [2008] UKHL 21

Re Dickson Holdings LtdBDLR [2008] Bda LR 34

Re Phoenix Kapitaldienst GmbH [2008] BPIR 1082

Assistance with foreign insolvency court - Application for stay of local insolvency proceedings

JUDGMENT of KAWALEY, J

Introductory

1. On June 29, 2009, pursuant to a Letter of Request from the Cayman Grand Court dated June 11, 2009, I granted an Ex Parte Order in respect of the Caymanian-incorporated company named Founding Partners Global Fund Ltd. ("the Company") in the following terms:

"1. That the appointment of David Walker and Ian Stokoe as provisional Liquidators of the Company is hereby recognized by this Court.

2.That the provisional Liquidators shall have such powers as would be available to them under the Companies Act 1981 as if they had been appointed liquidators under a compulsory liquidation pursuant to section 170 of that Act and in particular but without prejudice to the generality of the foregoing:

(i) To locate, protect, secure and to take into their possession and control all assets and property within the jurisdiction of the Supreme Court to which the Company are or appear to be entitled;

(ii) To locate, protect, secure and to take into their possession and control the books, papers and records of the Company including the accounting and statutory records within the jurisdiction of the Supreme Court;

(iii) To retain and employ barristers, solicitors or attorneys and/or such other agents or professional persons as the Provisional Liquidators consider appropriate for the purpose of advising or assisting in the execution of their powers.

3. That anything that is authorized or required to be done by the Joint Provisional Liquidators may be done by all or any one of the persons appointed.

4. That for so long as the company remains in liquidation in the Cayman Islands, no action or proceeding shall be proceeded with or commenced against the Company or its property within the jurisdiction of the Supreme Court except with the leave of the Supreme Court and subject to such terms as the Supreme Court may impose."

2. The Bermudian court has cooperated extensively with foreign insolvency courts in relation to parallel proceedings involving Bermudian companies over the last two

decades. It is quite rare to receive requests for assistance from foreign insolvency courts for recognition of a foreign insolvency order in relation to companies not incorporated in Bermuda. In the absence of a Bermudian statutory framework delineating the circumstances in which judicial cooperation with foreign insolvency courts will take place, there is a need for clarity as to the content and scope of the applicable common law rules.

3. As this was possibly the first occasion upon which this Court had exercised its common law discretionary powers to cooperate with foreign insolvency courts by recognising and assisting the foreign proceeding without commencing ancillary liquidation proceedings here, I indicated that I would give reasons for so deciding.

The Letter of Request

4. The Caymanian Joint Provisional Liquidators ("the JPLs") were appointed by the Caymanian Grand Court (Foster J) on June 11, 2009. On the same date the Cayman Court issued a Letter of Request which exhibited a copy of the JPLs' appointment order and requested an order substantially in terms of the Order made by this Court herein on June 29, 2009. The recitals to the Letter of Request described (a) the status of the Grand Court as "a court exercising jurisdiction in relation to company and insolvency law in the Cayman Islands", (b) the Company as having been incorporated in the Cayman Islands, (c) the presentation of a winding-up petition against the company on June 12, 2009, (d) the appointment of the JPLs, and further asserted that (e) "[t]he evidence filed in the proceedings has demonstrated to the satisfaction of this Court that in order for the provisional liquidators to discharge their obligations and in order to get in and preserve the assets of the Company for the benefit of creditors it is just and convenient that this request should issue."

5. In addition to requesting specific assistance by way of recognition of the status of the JPLs, empowering them to get in and preserve any Bermudian assets and ordering a stay of proceedings against the Company, the Caymanian Court also requested that:

"The Supreme Court grant such further or other relief as it thinks fit in aid of the provisional liquidators and the provisional liquidation."

The Submissions of Counsel

6. Mr. Diel supported his application by reference to the following authorities. Firstly he referred to the Isle of Man High Court decision in Re Impex Services Worldwide Ltd.[2004] BPIR 564. In this case, Deemster Doyle fulsomely articulated the reasons why the Manx Court could and should exercise its common law powers to assist the English High Court in relation to English insolvency proceedings relating to an English company. The assistance furnished took the form of recognising the foreign liquidator and permitting him...