The total number of winding up petition filings in offshore jurisdictions dropped by more than a third last year compared to 2017, a trend that continued in 2019, offshore law firm Appleby noted in its latest Offshore Corporate Insolvency and Restructuring report.
The analysis examined company petition filings and related court orders in Bermuda, the British Virgin Islands, the Cayman Islands, Guernsey, the Isle of Man and Mauritius.
In the six offshore jurisdictions, 193 compulsory winding up petitions were presented to the local courts in the course of 2018, down 35% from the previous year. A further 62 were filed so far in 2019.
Bermuda, the Isle of Man and Guernsey all showed steady levels of activity in 2018, in line with previous years, while Mauritius and BVI filings returned to previous years’ levels after experiencing a bump in activity in 2017.
However, in Cayman petition filings in 2018 jumped 50% relative to the previous year, in part due to seven local companies being liquidated after becoming embroiled in real estate investment fraud in the United States, the report said.
In previous years, the high level of activity around fund liquidations in Cayman following the financial crisis had eased somewhat.
The report examined notices published across four categories: compulsory winding up filings, conversion of voluntary liquidation to court supervised liquidation, schemes of arrangement and capital reduction.
Cayman recorded 65 petition filings across all categories compared to 57 in the previous year, with 45 converting into orders.
Although petition filings for schemes of arrangement and reductions of share capital fell sharply, petitions to place a company under court-supervised liquidation or be wound up were close to their highest recorded levels.
The report said there was no dominant sector driving 2019 petition filings, with industries ranging from a Madoff investor to a troubled smartphone manufacturer and the fallout from an illegal seizure of an East European TV channel.
The time it takes for an initial petition to result in a court order varied widely in Cayman from a matter of weeks to almost five months in cases involving significant legal and factual disputes.
“Last year saw a significant drop in the number of insolvency petitions filed in offshore jurisdictions and 2019 appears to be continuing this easing of filings, despite widespread anticipation of global slow-down during the period,” said Tony Heaver-Wren, partner and Co-Head of Insolvency & Restructuring in Appleby’s Cayman office.
Given the number of filings to date, 2019 figures are unlikely to overtake 2018 totals, Appleby said, adding that spikes in numbers are still possible as the complex organisation of some corporate structures can result in a cascade of insolvencies from a single troubled group.
In Guernsey for example, the court issued orders against a group of nine funds and sub-funds belonging to beleaguered investment firm Belvedere Management Group.