Liquidating a Company in the Cayman Islands
- Cayman Guide
- Oct 15, 2020
- 2 min read
Liquidating a Cayman Islands company can be achieved in a few months and at low cost, provided you follow the straightforward process.
Most cases of company liquidation in the Cayman Islands are voluntary, where a company has become insolvent, is unable to meet its obligations and ceases doing business. Of the approximately 3,500 companies terminated in the first half of 2019, the majority belonged to the Cayman Islands Exempted Company category, followed by the Non-Resident Company and the Resident Company, in that order.
A Voluntary Company Liquidation is where there is no court involvement and the process takes place according to the resolutions of the company’s directors. Court-Supervised Liquidation is similar, but the liquidator is subject to court supervision.
An Involuntary Company Liquidation, or Compulsory Liquidation, is where a creditor, or other party, issues a petition for the winding-up of the company. A Provisional Liquidation is where, in the case of a compulsory winding up, a petition is made to appoint a provisional liquidator.
As an alternative, one or more directors can file an affidavit stating that the company is no longer active, has no assets or liabilities and ask for it to be struck from the Companies Register. The application and affidavit should be approved by a resolution of the directors. Once it is struck off, the company is dissolved. A Company Strike Off is used generally for a company that has never traded.
Investors who want to pursue voluntary liquidation in the Cayman Islands need to go through the liquidation process for the company, whether or not there is court involvement. In nearly all cases it’s advisable to seek professional help to ensure that all creditor claims are met before the company can be struck from the register and officially ceases to exist.
The exact process of liquidating a Cayman Islands company forms part of each company’s Articles of Association and requires a special resolution to be adopted before the liquidation process can be started. The appointed liquidator can be any person chosen by the company’s board.
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