The Grand Court of the Cayman Islands has ordered that redemption payments to an investor of the failed Weavering Macro Fixed Income Fund made before the fund’s liquidation have to be repaid.
The Court ruled that the redemption payments constituted preferences and were therefore invalid. In doing so, the court has ordered that the redemption payments, which totaled over US$8.2 million, must be returned to the fund.
“the decision represents the first successful attempt by liquidators of a Cayman Islands investment fund to recover redemption payments on the basis of preference, meaning that the payments were made at a time when the fund was insolvent and made with a view to giving the investor a preference over the Fund’s other creditors,” offshore law firm Mourant Ozannes said in a press statement.
Mourant Ozannes partner Shaun Folpp, who acted for the Fund’s liquidators, said: “The court’s ruling confirms that redemption payments paid to investors are not immune from recovery by liquidators, including where those investors invest in the fund as a nominee or custodian, where the payments are preferential in nature.
“The court’s decision reinforces the general rule that all creditors of an insolvent company ought to be treated equally,” he added.
The proceedings, brought by the fund’s liquidators are part of wider efforts to recover assets of the fund for the benefit of all creditors.