Chief Justice Anthony Smellie ordered that four failed investment funds in voluntary liquidation receive court supervision on Monday.
QC Nigel Meeson, representing joint voluntary liquidators Nick Freeland and David Walker of PricewaterhouseCoopers, explained afterwards what the order meant.
‘It is a sort of hybrid [liquidation},’ he said. ‘It is a court supervised voluntary liquidation, which means that the voluntary liquidators now have the same powers and duties as official liquidators.’
The four funds – Grand Island Commodity Trading Fund 1, Grand Island Trading Fund II, Grand Island Income Fund and Grand Island Master Fund – were placed in voluntary liquidation after the discovery of irregularities in the funds’ trading activities last month.
Last week police arrested a 47-year-old man on suspicion of theft, false accounting and uttering false documents in connection with the funds. Officers at the Royal Cayman Islands Police Financial Crimes Unit said the collapse of the funds was thought to involve millions of dollars.
In making his application, Mr. Meeson said the voluntary liquidations would be better if under court supervision, partially because of the public interest aspect of the matter and partially because the liquidators would require the greater powers provided by court supervision.
During the proceedings, Mr. Meeson said he thought it was quite unusual that the relatively routine application would gain front-page attention in the Caymanian Compass on Monday morning. Chief Justice Smellie responded by saying it was unusual that a local investment fund gets into trouble.
Before signing the court supervision orders, Mr. Smellie asked about the role of the receiver that he recently appointed after another application with respect to funds held in Canadian bank accounts by another company called Caribbean Commodities Ltd.
Mr. Meeson said steps were being taken to repatriate the funds in the accounts to the Cayman Islands.
‘The receivership will continue to hold the funds,’ he said. ‘Once steps are taken to determine who those funds belong to, then further applications [to the court] will be made.’
The proceedings attracted media representatives from four different organisations.
So far, very little information has come from the joint voluntary liquidators and little additional information came out in court Monday.
Mr. Freeland said afterward it was still too early to give any details about the number of potential investors or the amounts of money lost.
‘We’re waiting to get information from various sources and until we start doing some of the forensic work, it’s just too early to give those kinds of details,’ he said. ‘We want to give the media appropriate information at the right time, but you have to respect our position.’
Besides Mr. Meeson, the only other attorney making an appearance in the matter was Andre Mon Desir on behalf of the Cayman Islands Monetary Authority.
Mr. Mon Desir said CIMA was aware of the application and supported it.