Cayman Islands
Answer ... The most common security interests in off-balance sheet securitisations involve security being granted over the underlying assets by the SPV in favour of the trustee for the benefit of the secured parties. These security interests usually exclude:
- any accounts maintained in the Cayman Islands in respect of such funds;
- the amounts (if any) remaining from the proceeds of the issuance and allotment of the issuer’s ordinary shares; and
- the corporate benefit fee paid to the issuer in respect of the transaction.
Cayman Islands
Answer ... The Cayman Islands has no public registration system to allow for the registration of security, mortgages, charges or any other form of security interest. It also has no legislation dealing with the perfection of security interests and offers no statutory priority for security interests.
A Cayman Islands entity is required under the Companies Act to maintain an internal register of mortgages and charges in respect of security interest. Only a member of the company or a creditor has a right to inspect those registers, and third parties generally cannot do so.
Because of this, recording a security interest on a company’s register of mortgages and charges does not provide constructive notice of the existence of the charges to third parties. Additionally, a failure to record the security interests does not invalidate or change the priority of the security interest.
Cayman Islands
Answer ... Not applicable.
Cayman Islands
Answer ... Not applicable.
Cayman Islands
Answer ... These will be regulated by the drafting of the underlying security agreement.
Cayman Islands
Answer ... Enforcement options will depend on the rights and remedies as set out in the relevant security document. The Cayman Islands is a creditor-friendly jurisdiction and, pursuant to Section 142 of the Companies Act, investors can enforce their contractual rights without making an application to a court in the Cayman Islands.
Cayman Islands
Answer ... The Cayman Islands courts will recognise and enforce foreign judgments and arbitral awards. The Cayman Islands is a party to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. The procedure for enforcing a foreign arbitral award is prescribed in the Foreign Arbitral Awards Enforcement Law (1997 revision). Judgments or orders of a foreign court in any civil proceedings, or a judgment or order given or made by a court in any criminal proceedings for the payment of a sum of money in respect of compensation or damages to an injured party, may be enforced at common law in the Cayman Islands.
Cayman Islands
Answer ... Yes. An enduring power of attorney/mandate granted by the servicer in favour of secured parties is recognised and enforceable. Typically, an assignment can provide for receivables to be automatically assigned to the purchaser as and when they come into existence.
There is no specific doctrine or legal provision in the insolvency laws of the Cayman Islands that allows for substantive consolidation. ‘Substantive consolidation’ refers to the merging of assets and liabilities of separate legal entities within a group during bankruptcy, liquidation, or other insolvency proceedings. However, in very rare and specific situations, the Cayman Islands courts may approve a pooling arrangement. This authority stems from the power of a court-appointed liquidator in the Cayman Islands to negotiate compromises or arrangements with creditors, subject to court approval. This jurisdiction is exercised only under exceptional circumstances, where the affairs of two or more companies or entities are so intertwined that combining their assets and liabilities is the most practical course of action.
Cayman Islands
Answer ... Yes. Cayman Islands courts recognise limited recourse, non-petition and subordinate provision.
In general, a Cayman Islands court will acknowledge and uphold a contractual limited recourse provision that is valid, binding and enforceable according to its governing law. If the contractual provision is governed by Cayman Islands law, even though there is no existing precedent on this specific matter, it is our belief that a Cayman Islands court will enforce such a provision if it is clearly articulated to that effect. This perspective is informed by prior English case law, which, while not legally binding, carries substantial persuasive weight.
The Cayman Islands has implemented Section 95(2) of the Companies Act (As Revised), which specifies that a Cayman Islands court must dismiss or postpone the hearing of a winding-up petition if the petitioner is obliged by a contract not to file such a petition against the company. This provision is also applicable to an exempted limited partnership under the Exempted Limited Partnership Act (As Revised). Additionally, Section 39 of the Limited Liability Companies Act (As Revised) contains a similar provision concerning limited liability companies.