Careful Consideration of Comity when Liquidating a Caymanian Company – Insolvency/Bankruptcy


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On February 22, 2022, Doyle J issued a winding-up order and appointed joint official liquidators in respect of GTI Holdings Limited (Company), a company incorporated in the Cayman Islands. The liquidation order was not opposed and Doyle J was satisfied that the company was insolvent. Nevertheless, in a judgment dated March 15, 2022, 1 Doyle J explained the reasons for his reluctance to issue this winding-up order.


On May 28, 2020, the Grand Court of the Cayman Islands appointed joint provisional liquidators of the Company for restructuring purposes (JPL). On November 9, 2020, Harris J of the High Court of the Hong Kong Special Administrative Region (Hong Kong Court) recognized the appointment of JPLs for restructuring purposes, thereby allowing JPLs to exercise certain powers in Hong Kong. His Lordship also advised that any further requests for assistance from the Hong Kong court should be directed to him.

The company subsequently sought an order from Harris J to convene a meeting of its creditors to consider and, if deemed appropriate, approve a proposed plan of arrangement. At a hearing on December 20, 2020, Harris J invited the Company to submit a revised plan document. After some delay, on November 8, 2021, Harris J ordered that a new request to convene the plan meeting be scheduled for hearing on March 29, 2022.

Linda Chan J of the Hong Kong Court subsequently refused to adjourn a liquidation petition in Hong Kong and on November 22, 2021 issued a liquidation order in respect of the Company. In its judgment, Doyle J’s records that Linda Chan J made the winding-up order despite the petitioner consenting to the adjournment and knowing that Harris J had entered the company’s request to call a plan meeting on March 29. 2022. In making the winding up order, Linda Chan J concluded that the scheme was not feasible and that there was no valid reason to adjourn the petition further.

On January 14, 2022, JPL applied to the Grand Court for a winding-up order and requested their appointment as joint official liquidators. Notwithstanding the Hong Kong liquidation order, JPL told Doyle J that if appointed as joint official liquidators, they would consider all options to maximize returns for stakeholders, including continuing to explore the proposed restructuring.

Primacy of the courts of the place of incorporation of a company

In Sun Cheong Creative Development Holdings Limited, 2 the Chief Justice of the Grand Court of the Cayman Islands has confirmed that where liquidation proceedings have been issued in more than one common law jurisdiction but an appointment has not yet been made, the starting point for the Court in applying the principles of modified universalism is determining which court should assume primary jurisdiction to deal with the claim and oversee the liquidation. The Chief Justice observed that recent authorities in Hong Kong and the Cayman Islands confirm that, in accordance with long-standing authority, this will normally be the place of incorporation of the company.

While observing that the Chief Justice’s comments were made in the context of a request prior to any appointment, Doyle J ultimately observed after reviewing relevant authorities, including those of the Hong Kong Court, that:

“In cross-border insolvency cases, I agree that it is particularly important to take a broad internationalist global view rather than a narrow, insular territorial approach. As a well-established and fundamental principle of private international law, it is also important to give due consideration to the primacy of the law of the place of incorporation Lord Sumption upheld such an approach in Singularis Holdings Limited v PriceWaterhouse Coopers [2014] UKPC 36 […]”

Further, Doyle J pointed out that while a liquidation instead of incorporation will normally be recognized and have extraterritorial effect, this is not the case for foreign liquidation proceedings, which generally only operate in that foreign jurisdiction. His Lordship cited Harris J’s recent decision in Li Yiqing v Lamtex Holdings Limited [2021]622 where Harris J confirmed that a liquidation instead of incorporation will have extraterritorial effect in Hong Kong, and further observed that, as a courtesy, the Hong Kong court will give considerable weight to express claims relating to a company to the courts of the place of incorporation of this company.


Convinced that the Company was unable to pay its debts, Doyle J issued the liquidation order and appointed the JPLs as joint official liquidators of the Company. The limited effect that the Hong Kong winding-up order would have on the Company’s subsidiaries outside Hong Kong was, according to Doyle J, also a strong reason for issuing the winding-up order. His Lordship confirmed that in issuing the winding-up order he had taken into account the views of the stakeholders and, in the interest of comity, the views expressed by the Hong Kong Court and the Official Receiver Hong Kong (who, following the suspension of the Hong Kong up order, was the Company’s provisional liquidator in Hong Kong). As noted by Doyle J, Grand Court judges reasonably have comity considerations in mind when determining issues in related proceedings already before the Hong Kong court.

While acknowledging that these were entirely matters for the Hong Kong court to address in due course, Doyle J also expressed his wish that the Hong Kong court would grant recognition and assistance to the joint official liquidators, and its view that the company’s creditors should be given an opportunity to vote on the proposed plan of arrangement.

This judgment recalls the importance of comity and cross-border cooperation in multi-jurisdictional insolvency proceedings, as well as the risks of duplicating costs and risks for stakeholders when the principles of modified universalism are engaged.


1 FSD 102/2020 (DDJ), unpublished, March 15, 2022.

2 FSD 169/2020 (ACSJ), unpublished, October 20, 2020.

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.


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