Cayman sees fewer insolvency petitions

The number of insolvency petition filings in most offshore jurisdictions fell in 2014 compared to 2013, reflecting positive changes in economic conditions over the course of the year, according to a report by law and fiduciary firm Appleby.

Petition filings and resulting court orders declined in the British Virgin Islands, the Cayman Islands, Guernsey, the Isle of Man and Mauritius. Only Bermuda saw an increase in insolvency filings.

The Cayman Islands recorded 58 petition filings in total, down from the 66 recorded in 2013. Of those filings, 34 were converted orders, the report “Snapshot: 2014 Petition Filings & Orders” noted.

“The fall in petition filings offshore reflects, in general terms, a retreat from the high-point of 2013 and brings 2014 much closer to the number of filings in 2008, when petitions were at the lowest level of the past seven years,” said Tony Heaver-Wren, a dispute resolution partner in Appleby’s Cayman office.

Cayman petition figures have been fairly consistent over the last two years, with only slightly fewer petitions filed in 2014 compared to 2013, and the conversion rate remaining nearly unchanged.

Among the petitions, winding up petitions and conversions of voluntary liquidation to court supervised liquidation, the two types of petition that seek a court liquidation in Cayman, combined to make up 59 percent of total petitions in the jurisdiction, down from 66 percent of total petitions in 2013.

“Overall, in Cayman we have not seen a dramatic wave of shareholder activism,” said Heaver-Wren. “Instead we have witnessed a steady pruning of dead-wood and a prioritization of new investment opportunities over the resolution of distressed legacy positions through filing of formal process.”

Across the six analyzed offshore jurisdictions, 233 petitions were filed in total, covering four categories measured in the report: winding up petitions, conversion of voluntary liquidation to court supervised liquidation, schemes of arrangement and capital reduction. As a result of those petitions, 102 court orders were made.