How May Investors in Cayman Islands Hedge Funds In Liquidation Protect Their Interests If Dissatisfied with the Liquidators’ Conduct of the Liquidation?

Investors are rarely happy to learn that the Cayman Islands hedge fund in which they have invested is entering liquidation.  That dissatisfaction can be exacerbated by the conduct of the liquidator.  Causes of such dissatisfaction include lack of transparency, delay, cost, fire sales, failure to bring claims, failure on the part of the liquidators to consider a restructuring, etc.  However, the Cayman corporate liquidation process is structured to protect shareholders and creditors in liquidations, and the Cayman liquidation framework provides safeguards relating to court and voluntary liquidations.  In a guest article, Christopher Russell and Paul Kennedy, partner and associate, respectively, in the Litigation and Insolvency practice group at Appleby, Cayman Islands, enumerate specific strategies whereby investors in liquidating Cayman hedge funds that are not satisfied with the conduct of the liquidator may protect their interests.  See also “When and How Can Hedge Fund Managers Close Hedge Funds in a Way that Preserves Opportunity, Reputation and Investor Relationships?  (Part Two of Two),” Hedge Fund Law Report, Vol. 7, No. 21 (Jun. 2, 2014).

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