Cayman Islands Case Notes, October 2014
- An assignment of a cause of action belonging to the company in return for a percentage of the proceeds of the action is a valid exercise by the official liquidator of his statutory power to sell the company’s property.
- An assignment of a percentage of the proceeds of such a cause of action pursuant to a litigation funding agreement is also a valid exercise of the official liquidator’s statutory power to sell the company’s property, provided that the funder is given no right to control or interfere with the conduct of the litigation.
- A purported assignment of a right of action or of the proceeds of a right of action vested in the official liquidator personally, such as a preference claim, is not authorized under the statutory power to sell the company’s property as this would amount to an unlawful surrender by the liquidator of his fiduciary power.
- “Limited recourse loan agreements”, whereby the funder (who may or may not be a stakeholder in the liquidation) provides purely financial assistance and agrees to receive a share of any proceeds recovered from the litigation.
- “Contingency fee agreements”, whereby the funder is a foreign law firm, and the law firm assumes the conduct of the litigation in return for a share (usually expressed as a percentage) of the proceeds of the claim if, and only if, the litigation is successful.
- “Conditional fee agreements”, whereby the funder is any law firm, and the law firm is paid on the basis of discounted hourly rates in any event, with an entitlement to an increase in fees in the event that the litigation is successful.
Published October 29, 2014
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