When a Cayman company faces distress, the jurisdiction offers highly flexible restructuring tools, most notably the "light-touch" provisional liquidation regime.
Light-Touch Provisional Liquidation
Unlike a terminal winding-up order, a company can petition the Grand Court to appoint provisional liquidators (PLs) with a specific mandate to facilitate a restructuring. This immediately triggers a global moratorium, freezing creditor actions against the company.
In a "light-touch" scenario, the existing board of directors retains day-to-day management control to continue operations and negotiate with creditors, while the PLs oversee the restructuring plan. This is highly analogous to US Chapter 11 bankruptcy.
Schemes of Arrangement
Often paired with provisional liquidation, a Scheme of Arrangement is a court-approved compromise between a company and its creditors. If approved by a majority in number representing 75% in value of the creditors (or a specific class of them), the scheme binds all dissenting creditors.
| Restructuring Tool | Primary Effect | Board Control |
|---|---|---|
| Official Liquidation | Terminal winding up, asset sale | Replaced by Liquidator |
| Light-Touch PL | Moratorium to negotiate restructuring | Maintained (under PL oversight) |
| Scheme of Arrangement | Cram-down of dissenting creditors | Maintained |