Earlier this month, the financial services site OffshoreAlert published an article reporting that the documents for an increasing number of cases at the Grand Court’s financial services division are not being made public.
According to OffshoreAlert, documents for roughly one-third of the court’s financial services cases this year were not publicly available – a drastic spike from the roughly 1 percent of cases that were sealed from 2010 to 2012, according to OffshoreAlert.
As of Monday, however, only 10 percent of this year’s financial services division cases at the Grand Court Registry were not available for inspection – a fact OffshoreAlert owner David Marchant attributes to his reporting on the matter.
Of the 37 cases from this year Mr. Marchant had listed as sealed, 26 were available for inspection and 11 were still unavailable when the Cayman Compass visited the registry on Monday.
Court Administrator and Chief Officer Suzanne Bothwell did not immediately answer questions about whether these records were made publicly available after OffshoreAlert’s reporting, or if they have been available all along and were somehow missed by the financial services site.
Fourteen of the now-available cases were winding-up petitions filed between January and June. There were also nine petitions for the Grand Court to make various orders for companies that were already in voluntary liquidation, and one case involved a lawsuit filed by Merrill Lynch Bank and Trust Company (Cayman) Ltd. against JTV Trustees (IOM) Ltd. in February.
The number of previously unavailable winding-up petitions come on the heels of practice directions made by Chief Justice Anthony Smellie last August, stating that winding-up petitions should only be made accessible for public inspection after there is a hearing date scheduled for the matter.
Chief Justice Smellie explained when issuing the directions that the “filing of a petition to wind up a company can cause irreparable harm to its reputation, even if the petition is ultimately dismissed for lack of merit.”
The Grand Court has stated that only 4 percent of cases this year have been permanently sealed, and that most winding-up petitions are usually made public within 72 hours of their filing, after a judge determines that they have merit.
However, there were 15 writs that were not available in the registry’s book of writs on Monday – a little more than 10 percent of the 149 financial services cases from this year. All the cases were filed Aug. 14 or earlier.
Mr. Marchant called the court’s assertion that it usually makes winding-up petitions public 72 hours after they are filed a “blatant lie,” and suggested that more cases are now public because of OffshoreAlert’s reporting.
“The sudden availability of many previously sealed cases emphasizes the importance of OffshoreAlert as a watchdog for the offshore financial services industry,” Mr. Marchant stated. “Left to its own devices, the industry will do as it pleases and these cases would still be sealed.”
He also said that the 10 percent mark for currently unavailable cases is still far too high.
“If, as you say, approximately 10 percent of [financial services division] cases are still sealed, that’s still way too high for any jurisdiction that wants to be taken seriously in the world of high-value finance and is more than double the percentage of cases the Court [said] a few weeks ago were sealed,” the OffshoreAlert owner stated.
“By sealing cases in bulk and then providing incorrect statistics when challenged, the Court has lost some of its credibility and it needs to work hard to regain the trust of foreign individuals and businesses that have collectively put hundreds of billions of dollars into Cayman-domiciled legal vehicles and expect the basic right to be able to conduct effective due diligence before parting with their money.”