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Debt Restructuring – Cayman Islands Jayson Wood, Jessica Williams and Jaron Leslie, 27 May 2020

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Debt Restructuring Contents

01

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Economic Climate

02 Risks

03 Debt Restructuring 04 Protective vs Reactive Measures 05 Pensions 06 Questions 2019 Š Harneys

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01

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Economic Climate

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Economic Climate Covid-19

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• The COVID-19 pandemic economic impact • Government assistance

• Commercial banks • Debt Restructuring

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02 Risks

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Risks

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Liquidation/Litigation risk

• Breach of contract claim?

• Creditor’s winding up petition?

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Risks

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Protective Measures

• Engagement with creditors

• Proactive vs Reactive Approaches

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03

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Debt Restructuring

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Debt Restructuring Main Types of Debt Restructuring

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• Deferring payments • Offering creditors X cents on the dollar in exchange for a full release of debt obligations (X being greater than in an insolvency situation) • A debt for equity swap • A combination deal

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04

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Protective vs Reactive Measures

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Protective vs Reactive Measures Hats Limited

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• Cayman company (manufacturing and selling hats) • Shelter in Place Regs (closed for over two months)

• Creditors (bank loan obligations and private debt) • Balance sheet solvent - Cash flow insolvent • Cash injection from shareholders • Creditor arrangement

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Protective vs Reactive Measures Appointment of Provisional Liquidators

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The gateway is, that the company: • is unable to pay its debts

• intends to present a compromise to its creditors

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Protective vs Reactive Measures Practical Tips

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• presentation of a winding up petition is required • accompanying documents

• check the articles of association • filing fees • notice to creditors

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Protective vs Reactive Measures Rays Limited

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• Cayman company (provides speed boat rides to tourists ) • Shelter in Place Regs (closed for over two months)

• Creditors (private debt in and outside Cayman) • Balance sheet solvent - Cash flow insolvent • Most creditors defer payment except one (1) creditor (ABC Limited) • ABC Limited files winding up petition

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Protective vs Reactive Measures Reactive Approach

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• Risks

• Creditors entitlement to a winding up order

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Pensions

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Pension Protection Pension and Restructuring

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• Changes to the National Pensions Law • Corporate veil

• Careful consideration of use of withdrawn funds

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Questions?

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