In a ground-breaking decision for the Cayman Islands as a restructuring centre, the Cayman Islands court has handed down judgment sanctioning four highly complex inter-linked schemes of arrangement.
The schemes result in the compromise of US$3.69 billion of New York law governed debt for the Cayman Islands registered parent of the Ocean Rig group and three of its Marshall Islands incorporated subsidiaries.
The restructuring is the largest implemented through Cayman Islands schemes of arrangement and contains a number of Cayman Islands firsts, novel features and important developments in the law.
- The Cayman Islands court confirms jurisdiction to scheme foreign incorporated companies – this widens the circumstances in which a Cayman Islands scheme may be available considerably
- Demonstrates defensive advantage of provisional liquidators
- Moratorium on creditor action in the Cayman Islands (no stay on the enforcement of security)
- Temporary restraining order in the U.S. pending recognition under chapter 15 of the U.S. Bankruptcy Code
- Independent voice to negotiate with dissenters
- Independent scrutiny of the schemes
- For the purpose of U.S. recognition and enforcement, a shift of the scheme companies' centre of main interests ("CoMI") prior to provisional liquidators being appointed – this shift included the creation of a Cayman Islands restructuring subsidiary and is the first pre-filing CoMI shift to the Cayman Islands
- The New York court expressly recognised that Cayman Islands exempted companies can have their CoMI in the Cayman Islands – accepting that exempted companies can be managed from the Cayman Islands
- A novel court-to-court protocol between the Cayman Islands and New York courts
- The innovative use of a Cayman Islands purpose trust to preserve litigation claims against third parties
- The application of recent leading English scheme case law (including on consent fees and cross holdings) in the Cayman Islands – creating greater certainty to Cayman Islands law
- Early (pre-Disclosure Statement) dissemination of information to creditors