The matter of the Indies Suites liquidation began in the Court of Appeal on Thursday.
Ramon Alberga QC acted on behalf of Indies Suites Ltd.’s sole shareholder, Brac Construction Ltd. on the instruction of Attorney Wade Dacosta.
Brac Construction appealed the earlier decisions of the Grand Court to appoint Chris Johnson and Associates provisional and then official liquidators of Indies Suites Ltd.
Mr. Alberga’s main argument Thursday morning was that Rod Broome, one of the Indies Suites club members, did not have standing to bring a petition for the liquidation of Indies Suites Ltd. because he was not a creditor of the company.
Citing case law from 1862, when UK law was similar to current Cayman law with respect to the issue of who has standing to bring about a petition for liquidation, Mr. Alberga said it was clear Mr. Broome did not have that standing.
Mr. Broome claimed unspecified damages for breach of contract in his petition.
‘My submission in this case is the petitioner is not a creditor and that [the Grand Court] should not have made the judgements they did, and that they should be set aside,’ Mr. Alberga said.
Mr. Alberga said that under the current Cayman law, Mr. Broome would have to change his claim to a judgment before becoming a creditor.
Attorney for Mr. Broome, Alan Turner, said the Grand Court’s jurisdiction to hear matters in the way those judges did is often evoked in the Cayman Islands and said Mr. Alberga’s case law should not be binding here.
‘Nobody has come along in these circumstances and said you can’t proceed (without a creditor actually having obtained a judgement first),’ Mr. Turner said. ‘The Grand Court takes a very practical approach.’
Mr. Turner warned that if the Court of Appeal dismissed the case, a person who controls a Cayman Islands company could commit a fraud against another person, and that person would not be able to petition for the provisional liquidation to prevent further fraud and the dissipation of further assets until it obtained a judgment.
Mr. Justice Martin Taylor conceded the process could take longer but pointed out there could be other methods of protecting creditors in the meantime.
One major development in the case was the undertaking of Brac Construction to add an amount of $653,000, which Indies Suites Ltd. had paid it from the proceeds of the sale of the Indies Suites property, to the funds available to pay legitimate creditors of the company.
Mr. Turner pointed out that the combined total of that $653,000 and the $885,000 already committed by Brac Construction to pay creditors was about the same amount Indies Suites said it owed Brac Construction, so the amount paid into Court did not guarantee Indies Suites club members would get the benefit of those funds.