Substance over form: Cayman Court recognises extrajudicial liquidator under Companies Act and common law

Given the islands' position in global financial markets, the question of how foreign insolvency proceedings can be recognised and assisted by the Cayman Islands Courts is always a relevant concern to insolvency practitioners, creditors and other stakeholders.  

In one of its most recent decisions, the Grand Court of the Cayman Islands has provided important guidance on the recognition of foreign insolvency officeholders, demonstrating (as expected) that it will take a pragmatic view on the matter in question, particularly when dealing with novel and unusual issues.

In Re Banco Master S.A. [2026] CIGC (FSD) 67 (Re Banco Master S.A.), Justice Asif granted recognition to a Brazilian liquidator appointed by the Central Bank of Brazil in an extrajudicial liquidation process, both using the Grand Court's statutory jurisdiction under Part 17 of the Companies Act (2026 Revision) as well as its common law powers of recognition. The decision helpfully clarifies the scope of the statutory recognition regime and importantly confirms that recognition is not only confined to foreign officeholders appointed through formal court proceedings.  

Case background: Re Banco Master S.A.

Banco Master S.A., a Brazilian financial institution based in São Paulo that also served as an investment brokerage firm, was placed into extrajudicial liquidation by the Central Bank of Brazil. EFB Regimes Especiais de Empresas Ltda. (EFB) was appointed to act as liquidator in accordance with Brazilian statutory provisions, of which the Central Bank is entitled to appoint, and is responsible for supervising, liquidators of certain financial institutions.  

EFB sought recognition in the Cayman Islands as Banco Master appeared to have invested substantial sums in two Cayman entities and considered that recognition was necessary in order to facilitate investigations, asset recovery efforts and potential claims relating to those investments. EFB had already obtained recognition in the United States and the Bahamas. 

As noted above, this application was brought on two bases: the first being under the Grand Court's statutory recognition powers and the second at common law.  

Statutory recognition 

Sections 240 to 242 of Part 17 of the Companies Act provide the relevant statutory framework for recognising and assisting foreign representatives.  

As a threshold question, the Grand Court will need to be satisfied that the foreign representative is "a trustee, liquidator or other official appointed in respect of a debtor for the purposes of a foreign bankruptcy proceeding". In turn, a foreign bankruptcy proceeding is defined in Part 17 as including "proceedings for the purpose of reorganising or rehabilitating an insolvent debtor".  

Foreign bankruptcy proceedings

The key issue before the Court was whether the Brazilian extrajudicial liquidation constituted a "foreign bankruptcy proceeding" within the meaning of section 240 of the Companies Act. Demonstrating the flexibility inherent in the statutory recognition regime, the definition of foreign bankruptcy proceeding is not in the form of an exhaustive list.  

In considering where the boundary lies in determining whether a foreign proceeding falls inside or outside of this definition, the Court drew support from international authorities, including the analysis of the Hong Kong Court of First Instance in Supreme Tycoon Limited [2018] HKCFI 277 and the Privy Council's decision in Singularis Holdings Limited v PricewaterhouseCoopers [2014] UKPC 36.  

The Court concluded that the defining characteristic of a foreign bankruptcy proceeding is not whether it is conducted through a court process, but whether it is a collective insolvency process for the benefit of the general body of creditors.

Applying that test, Justice Asif was satisfied that  

• EFB's appointment was analogous to that of a liquidator appointed in judicial insolvency proceedings, rather than a private contractual receiver or similar officeholder

• the Brazilian extrajudicial liquidation was clearly a collective insolvency process and therefore fell within the scope of the term "foreign bankruptcy proceeding" for the purposes of Part 17 of the Companies Act 

Discretion of the Court 

Having determined that the statutory gateway requirements were satisfied, the Court considered whether it ought to exercise its discretion to grant statutory recognition to EFB in the circumstances.  

Justice Asif considered that, once those gateway requirements are met, the governing purpose of Part 17 is to make orders that best ensure an economic and expeditious administration of the debtor's estate, and was satisfied that EFB's appointment met that objective.  

It was noted that Banco Master appeared to have substantial claims connected to Cayman entities, including an investment reportedly exceeding US$100 million and other claims arising from transactions under investigation. As a result, recognition would assist not only EFB, but other counterparties asserting claims against Banco Master, in that it could support investigations into potentially fraudulent transactions. Justice Asif also appeared to find comfort in the fact that the evidence before the Court established that although the liquidation was not commenced by a Brazilian court, the process remained subject to the Brazil court's overall supervision and review.  

The Court was therefore satisfied that it was appropriate to grant statutory recognition to EFB under Part 17 of the Companies Act as foreign representative on behalf of and in the name of Banco Master. 

Common Law recognition 

The Court then considered the position at common law. Justice Asif stated that Part 17 represents a partial codification of, and supplement to, the common law recognition regime, with the caveat that at common law, there is no specific requirement that the foreign representative must have been appointed as a result of a foreign bankruptcy proceeding.  

In doing so, the Court's analysis was consistent with the approach previously taken by Segal J in In re China Agrotech Holdings Limited FSD 157 of 2017 (NSJ), which recognised the continuing availability of common law assistance in appropriate cross-border insolvency cases alongside the statutory regime. Justice Asif therefore concluded that, even if statutory recognition had not been available, common law recognition would have been appropriate in the circumstances. 

The Court again adopted the reasoning in Re The Joint Liquidators of Supreme Tycoon Limited ([2018] HKCFI 277) and concluded that the key jurisdictional consideration as to whether it should give or refuse recognition and assistance at common law is whether the foreign insolvency proceeding is collective in nature for the benefit of the general body of creditors. On that basis, Justice Asif found that the Brazilian extrajudicial liquidation was also capable of recognition at common law.  

Practical implications 

This decision provides welcome clarification on the recognition process for foreign officeholders in the Cayman Islands. Justice Asif places significant emphasis on the substantive nature of the foreign process, rather than its form. Crucially, where a foreign procedure is collective in nature and designed to administer an insolvent estate for the benefit of creditors generally, recognition may be available even if the officeholder is appointed by a regulatory authority or other non-judicial body.  

Re Banco Master S.A. also reinforces the Cayman Court's continued commitment to modified universalism and the pragmatic, efficient treatment of cross-border insolvency procedures. Indeed, in granting recognition, Justice Asif expressly noted the ongoing importance of comity and that, in the present circumstances, it was appropriate for the Court to assist both the Brazilian courts and the Central Bank of Brazil in administering the liquidation.

How Ogier can help

Ogier has one of the largest Dispute Resolution teams in the Cayman Islands advising officeholders, creditors, stakeholders and financial institutions on all aspects of cross-border insolvency, recognition applications and asset recovery proceedings. Our team regularly acts in matters involving the interaction of Cayman insolvency law with foreign restructuring and liquidation processes.  

For more information on this topic or to find out how the firm can advise you in this area, speak to your usual Ogier contact or one of the authors of this article.

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