Business

Cayman Court clarifies the law on claw-back claims

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  1. The payments were rendered unlawful by s.37(6)(a)2 of the Companies Law (2007 Revision), because they were payments out of capital and the 2X Fund was cash-flow insolvent at the relevant dates. This gave rise to restitution and/or constructive trust claims against RMF.
  2. The payments were paid pursuant to mistakes of fact or law as to the solvency of the 2X Fund, so as to give rise to a restitution claim allowing the 2X Fund to claw-back the sums paid to RMF.
  3. The payments were fraudulent preferences, under s.168 of the Companies Law (2007 Revision).
  4. Subject to this section, a company limited by shares or limited by guarantee and having a share capital may, if so authorised by its articles of association, make a payment in respect of the redemption or purchase of its own shares otherwise than
  5. References in subjection, (6) to (9) to payment out of capital are subject to paragraph (f), references to any payment so made, whether or not it would be regarded apart from this subsection as a payment out of capital
  6. paying distributions or dividends to members;
  7. in the Any manner provided in section 37;
  8. providing for the premium payable on redemption or purchase of any shares or debentures of the company; Provided that no distribution or dividend may be paid to members out of the share premium account unless, immediately

Published December 2, 2014

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