What key trends have you seen in cross-border asset recovery during the last 12 months? Is demand for such services on the rise in Cayman Islands?

In the Cayman Islands we are frequently involved in cross border asset recovery efforts given the multinational nature of the businesses and investment vehicles here. Foreign judgments and arbitral decisions can be recognized and enforced. There is also a willingness for the Cayman Court to provide assistance to foreign courts upon request. One of the major components of Cayman’s financial industry is the hedge fund industry.

The Cayman Islands is the most popular jurisdiction for hedge funds with nearly 11,000 funds registered with the Cayman Islands Monetary Authority. The prevalence of those funds makes decisions relating to the liquidation of such funds extremely important. In a recent decision, the Privy Council considered the position of an investor who had redeemed but have not been paid prior to the suspension of redemptions. The court confirmed that the redeemed investor would be considered a creditor and rank as such in the liquidation (and accordingly rank ahead of the claims of other investors). This determination is important as it ensures that the contractual relationship between the fund and the investor is honoured and in so doing brings certainty to the rights attaching to redeemable shares.