Glossary of Terms

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Complete and without conditions.  For example, a bankrupt, usually after nine months receives an Absolute Order of Discharge, which means all of his debts, with certain exceptions, are wiped out.
Acceleration Clause
Any clause in a contract which spells out that when certain actions are taken, the clause comes into effect.  A common acceleration clause is the clause in a lease that says if a company goes into bankruptcy, three months rent is due as a preferred claim.
The act ofA accepting something, usually a contract.  For example, an offer is made to some person that that person buys certain goods for a certain amount of money.  If the person to whom the offer is made agrees, then the offer is considered to be accepted.
Goods that are installed in or affixed to other goods.
A bill which has passed through the various legislative steps and, hence, has become law.
A proceeding in a Court of law where one person seeks a Court Order for the enforcement of that person's or company's rights.
Address for Service 
The address at which legal documents must be served at.
In English law an administrator can be appointed extra-judicially by the holder of a qualifying floating charge, and the administrator appointed is an officer of the Court, whether or not appointed by the Court. There is no equivalent statutory appointment under Cayman Islands law. Under Cayman Islands law the power of a receiver who is appointed by the holder of a floating charge to realize the creditor's security, depends upon the terms of the security (e.g. a debenture) under which the receiver is appointed and the rules of equity as they apply to receivers.
The delay or postponement usually to another time of a meeting or action.
Adjustment Date
The date on which parties agree that certain financial adjustments will be made to a contract.  For example, on the sale of property, there is an adjustment date set which is the time for the costs, such as property taxes, water, etc., to be apportioned between the purchaser and the vendor.
The Cayman Islands Monetary Authority ("Authority") has the statutory authority to appoint an Advisor at the expense of a licencee to advise that licencee on the proper conduct of its affairs and to report to the Authority thereon. A licencee includes any company licenced under the Banks and Trust Companies Law (2003 Revision), the Insurance Law (2004 Revision), the Mutual Funds Law (2003 Revision), and the Securities Investment Business Law (2004 Revision).
A statement by a person in which the person swears that to the best of his or her knowledge, the facts in question are true.  An affidavit is sworn before a Notary, Justice of the Peace, Lawyer or some other judicial officer who can administer oaths.
After Acquired Property
Property of a bankrupt acquired between the date of bankruptcy and prior to the bankrupt's discharge from bankruptcy.
A person who has received, usually by appointment, the power to act on behalf of another.
A legal entity without shares established in Liechtenstein, with some features of a trust but with corporate personality
Certificate of Good Standing in connection with corporations according to the Convention of The Hague of October 05, 1961
The act of making a request usually of the Court. For example, an application to have a company placed in liquidation.
The act of designating, or the acquisition of some, responsibility or position.  For example, the Court or the shareholders can appoint a person(s) to act as Liquidator of a company
An amount given to one spouse by another while they are separated or divorced.
To make void or to cancel.
To ask a more senior Court or person to review a decision of a subordinate Court or person.
Anton Piller Order ("Search and Seize Order")
An ex parte search order for the discovery and preservation of property. The order takes its name from the Court of Appeal decision in Anton Piller KG v Manufacturers Processes Ltd [1976] 1 All ER 779.
The act of showing up in Court as either plaintiff, defendant, accused, or any other party to a Court
A formal dispute resolution mechanism, whereby an independent neutral third party is appointed to hear and consider the merits of the dispute, and who renders a final and binding decision called an award.
Arm's Length
The act of dealing with a person who is not related but an independent third party.
The amount of money by which a contract or obligation is in default.
Articles of Association
The Articles of Association together with the Memorandum of Association form the constitution of a Cayman Islands company. The First Schedule to The Companies Law (2007 Revision) - Table A - provides a model set of Articles of Association, all or any of which a company may adopt. The Articles of Association govern the internal affairs of the company such as the holding of a meeting of the shareholders. The Articles of Association may be altered by the members of the company to an almost unlimited extent, the only limitations being the requirements of The Companies Law (2007 Revision), the Memorandum of Association, and certain common law principles (e.g. alterations being bona fide for the benefit of the company).The Memorandum of Association sets out a company's particular corporate personality.
The valuing of a thing or property
A thing, chattel resource or item or piece of property owned or controlled by a person or company. An asset can be intangible (i.e. cannot be touched) such as goodwill, intellectual property rights.
To give or to transfer an asset (or liability) to another.
Associates of companies include other companies under common control. Associates of an individual include family members, relatives, partners and their relatives, employees, employers, trustees in certain trust relationships, and companies which the individual controls.
A person who is appointed under law to act or assist any other person to repossess, cease or distrain pursuant to conditions set out in various Acts.
A person who has made an assignment or against whom a receiving order has been made, or the legal status of that person.
A legal remedy that addresses the problem of an individual's inability to pay their debts when they fall due for payment. The term "insolvency" is often used to describe the various formal legal procedures that apply to an individual (i.e. bankruptcy) or a company (i.e. liquidation).
Bankruptcy Order
Order of the Court, based on a creditor's or debtor's petition, which makes an individual bankrupt.
Bankruptcy Petition
A request made by the debtor or by a creditor to the Court for an individual to be made bankrupt.
Beneficial Owner
Person who is the ultimate beneficiary of a company.
The person who is in receipt, or will be in receipt, of some asset, thing, or thing of value.  For example, a person can make a will naming someone, usually their spouse or children, as beneficiary of their estate.
Bill of Exchange
A legal document, such as a cheque, where one person in writing specifies that a third party will pay a person a specific sum of money at a specific time, or upon demand.
Bill of Lading
A document received by a transportation company acknowledging that it has received certain goods and, for the purpose of transportation, serves as title to that property.
Bill of Sale
An agreement in writing signifying that one person for a specific sum of money has acquired specific assets.
Bona Fide
A Latin term meaning an act was done honestly and in good faith.
Break-up Sale
Dismantling of a business. Trading ceases and the assets are sold off piecemeal. Insolvency practitioners prefer to sell as a going concern if possible.
Case Law
That body of Court decisions that act as precedents in the interpretation of various Acts.  In some cases, the rule is not in any legislation or Act of Parliament, but can be found as a principle of law established by a judge in some recorded case.
A legal notice lodged with the appropriate Court or authority to prevent further steps being taken in certain processes e.g. a purchaser of land may lodge a caveat over the title to prevent the land from being transferred to any other party
Cayman Islands Gazette (
Official publication of the Cayman Islands Government that contains legal notices and is published every two weeks. Copies may be viewed on line.
Cayman Islands Monetary Authority (
The Cayman Islands Monetary Authority is the independent body incorporated by the Cayman Islands Government with the statutory duty to promote and maintain a sound financial system in the Cayman Islands. The statutory responsibilities of the Authority include the licensing, registration, supervision and regulation of banks, trust companies, insurance companies and mutual funds operating in or from the Cayman Islands.
Cayman Stock Exchange ( The Cayman Islands Stock Exchange is the independent body incorporated by the Cayman Islands Government to provide a listing facility for Cayman Islands offshore mutual funds and specialist debt securities. This listing facility has been expanded to include global depositary receipts, derivative warrants and eurobonds.
Certificate of Incorporation
Certificate issued to companies who have complied with all the statutory requirements for registration.
Chapter 11
A procedure used in the United States comparable to Administration. Assets are ring-fenced but control remains with the directors, rather than with an Administrator.
In many contexts the words 'charge' and 'mortgage' are used interchangeably, but there is an important distinction between the two concepts. A mortgage involves a conveyance of property subject to a right of redemption, whereas a charge conveys nothing and is an umbrella expression to cover a right of recourse to property for security purposes. A charge may be a fixed or floating charge.
Charging Order
Court order placing restrictions on the disposal of certain assets, such as property or securities, given after judgement and gives priority of payment over other creditors.
Assets that are movable and not attached to land or real property.
Chattel Mortgage
An interest that is given by one person in, say, a piece of property such as a piano to another person to secure a debt.
Chose In Action
The right of property in intangible things which are incapable of being taken into physical possession, but that are enforceable through legal or Court action, such as debts, insurance claims, shares in a company, pensions and salaries.
Claim Provable In Bankruptcy
Any claim or liability that is provable in a proceeding under the Insolvency Act.
Property that has been given or committed in order to guarantee a loan.
[The] Companies Law (2007 Revision) The Cayman Islands statute that sets out the manner in which Cayman Islands companies are formed, conduct their business, wound up or struck off the register.
Company Guarantee
A company guarantee is where a company guarantees the debt of another company or person. If the company is a member of a group, a debenture creating a cross guarantee under the debenture is frequently given. This effectively creates a charge over another company's debts and ranks ahead of its own unsecured creditors (but the company itself receives a cross guarantee of indebtedness from other companies in the group).
Completion Date
That date on which the transfer of title is to be made. Used in Agreements for Sale & purchase.
Compromises with Creditors
A voluntary arrangement with creditors following a formal proposal setting out the term and effects of the proposal and calling a meeting of creditors to vote on the proposal. The compromise requires a 75% in value and a majority in number support of creditors voting.
Compulsory or Court Liquidation A company may be wound up by the Grand Court of the Cayman Islands if - (a) the company has passed a special resolution requiring the company to be wound up by the Court; (b) the company is unable to pay its debts; or (c) the Court is of the opinion that it is just and equitable that the company should be wound up.
Connected Persons
Directors or shadow directors and their associates, and associates of a person or company.
Refers to money or something of value in exchange for acquiring some goods or services or other interest in an asset.
To hand over or give possession of an asset to someone, but not pass legal ownership.
Contingency Fee
That fee which a person is entitled to per an agreement upon the successful completion of some action.
Contingent Asset
An asset that might arise if a certain event occurs (e.g. current legal action being taken by a company might result in an asset if the company wins the case).
Contingent Liability
A liability which is contingent upon a future event.
The setting off of mutual debt.  For example, if a company owes $100 to another company that is owed $30 by that company in turn, the company is allowed to set off the $30 against the $100 and make a net payment of $70.
An agreement between parties, where each party has obligations.  In order to be valid, a contract must have three basic elements; an offer, an acceptance of that offer and consideration.
Every person liable to contribute to the assets of a company in the event of the company being wound up under The Companies Law (2007 Revision). In most cases this means shareholders who have not paid for their shares in full.
The Cayman Islands Monetary Authority ("Authority") has the statutory authority to appoint a "Controller" at the expense of a licencee to assume control of the licencee's affairs. A licencee includes any company licenced under the Banks and Trust Companies Law (2003 Revision), the Insurance Law (2004 Revision), the Mutual Funds Law (2003 Revision), and the Securities Investment Business Law (2004 Revision).
That act which transfers property from one person to another.
Cork Report
Report of the Insolvency Law Review Committee chaired by Sir Kenneth Cork, upon which the UK Insolvency Act 1986 is substantially based (Command Paper 8555, 1982)
Court of Appeal (Cayman Islands)
The Cayman Islands Court of Appeal hears appeals from the Grand Court of the Cayman Islands. A further and final appeal from the Court of Appeal lies to the London based Judicial Committee of the Privy Council.
Court-appoionted Receiver
A person, not necessarily a licenced Insolvency Practitioner, appointed to take charge of assts usually where they are subject to some legal dispute. Not strictly an insolvency process, the procedure may be used other than for a limited company, e.g. to settle an ownership dispute.
The Grand Court of the Cayman Islands.
Court Supervision
The Companies Law (2007 Revision) provides that when a special resolution has been passed by a company resolving that the company should be wound up voluntarily, the Grand Court of the Cayman Islands may make an order directing that the voluntary winding up should continue, but be made subject to the supervision of the Court upon such terms and conditions that the Court thinks just.
Creator, Settlor or Grantor
A person who creates/settles a trust.
That person who has a claim, preferred, secured or unsecured. It includes contingent claims and claims for an uncertain amount.
Creditors Committee (or Liquidation Committee)
A committee formed to represent the interests of all creditors in supervising the activities of the liquidator.
Cross Border
A transaction that has legal implications in more than one jurisdiction.
That point in time where a contract or agreement triggers certain clauses in that contract.  For example, when a debentureholder appoints a receiver pursuant to its debenture, all the assets of the company in question, that are not secured by other creditors, are captured by that debenture.
A bank, financial institution or other entity that has the responsibility to manage or administer the custody or other safe keeping of assets for other persons or institutions.
Cash compensation awarded by a Court to offset losses or suffering caused by another person's negligence or fault.
A document stating the terms of a loan to a company usually secured on the assets of the company. The lender is known as a debenture holder.
An amount owed.
A person who owes money, goods or services to another.
Declaration of Solvency
A Declaration of Solvency is required for a members' liquidation.
Decree Nisi
A provisional decision of the Court that does not have absolute effect until certain conditions are met.
Decree Absolute
The name given to the final and conclusive Court Order after the condition of a "decree nisi" is met.
De Facto Director
A person who is not formally appointed as a director (i.e. not a de jure director). He is equally liable to face any proceedings as a De Jure Director.
Failure to pay or otherwise perform obligations under a contract.
De Jure Director
A person duly appointed a director of a company in accordance with the company's Articles of Association.
Demand Letter
A letter usually from a lawyer on behalf of a client that makes a demand for payment or some other action which is in default.
The Companies Law (2007 Revision) does not define the word 'director'. In the absence of any precise definition, it is not easy to ascertain the exact nature of the office of a director. However, Regulation 66 to the First Schedule to that Law states the "business of the company shall be managed by the directors", and it has been said that "it does not much matter what you call them as long as you understand what their true position is, which is that they are really commercial men managing a trading concern for the benefit of themselves and all the other shareholders in it" ( Re Forest of Dean Coal Mining Co. (1879) 10 ChD 451 at 453 per Jessel MR).
Directors' Duties
Directors' duties broadly fall into three categories - statutory duties, duties of skill and care, and fiduciary duties (i.e., duties of good faith and honesty). The directors' statutory duties include the duties to ensure the company maintains proper books of account, the company registers are in good order and are maintained at the registered office, and the company complies with all reporting requirements. In addition to these statutory duties the directors have a duty to exercise their powers with due care and skill and for the purpose for which they are conferred in what they bona fide consider to be in the best interests of the company. Also, directors are bound by the broad principle that affects all persons who are subject to fiduciary duties, that "no one, having such duties to discharge, shall be allowed to enter into engagements in which he has, or can have a personal interest conflicting, or which possibly may conflict, with the interests of those whom he is bound to protect" ( Aberdeen Ry Co v Blaikie (1854) 1 Mac 461 at 471 to 472, HL (SC) per Lord Cranworth LC). Furthermore, as directors are regarded as trustees of company property, they can be held liable for any misapplication of that property.
To cancel or relieve a person of an obligation or responsibility.
To cancel or relieve a person of an obligation or responsibility.
The act of ending, terminating or winding up of a company or state of affairs (see Removal from Register).
The right that a landlord has to seize the property of a tenant on the premises being leased and sell that property for payment of rent arrears. The procedure for distraining is set out in the Distress and Replevin Act 1908.
Dividends (Distributions)
Sums paid by the liquidator from time to time to the creditors and to the shareholders once all the creditors have been paid.
The place where an individual has his permanent home, or to which he intends to return, or in some cases the country of origin. In other jurisdictions the place where an individual has a long established residence or in relation to a company, where it is incorporated.
The right held by one person to make use of the land held by another person for a limited interest.  For example, a utility may have an easement over a piece of real property which allows that utility to have, for example, electrical power lines running over that property.
Effective Date
The date an agreement comes into force. Also applies to legislation.
Those charges or the security that attaches to any kind of property.  For example, if there is a mortgage on a piece of property, then the property is said to be encumbered by that mortgage.
This refers to the excess that the value of a piece of property has after accounting for any charges or encumbrances against that piece of property.
When a contract or an asset such as money is placed with a third party until certain conditions are met, it is said to be held in escrow. Parties that are in dispute over the ownership of an asset may agree to place the asset in escrow until an arbitrator has had time decide who is the rightful.
The name given to the file or bankruptcy estate.
Ex Parte
Latin - for one party only.  Ex parte refers to those legal proceedings where one of the parties has not received notice and therefore is neither present nor represented at the Court Hearing.
Examination For Discovery
A legal proceeding whereby one party examines the party on the other side, usually under oath for the purpose of confirming facts and perhaps obtaining admissions from that other party. The Liquidator has the power to examine directors, staff, creditors, bank managers, accountants, solicitors and any other person who has knowledge of the affairs of the company. This power is given to the Liquidator under Section 261 of the Companies Act 1993.
On obtaining judgement, a creditor may seek to recover a debt by this process, which relies on the Court Bailiff seizing the debtor's goods for auction. The mechanism is similar to that used in distraint proceedings.
Exempted Company
A Cayman Islands company whose business is conducted outside the Cayman Islands.
Extraordinary General Meeting
A meeting of the shareholders other than the annual general meeting of the shareholders.
Fair Market Value
That hypothetical value of a piece of property, given a willing purchaser and a willing vendor, and a reasonable amount of time for the property to be exposed to sale.
Fee Simple
Title to ownership without restriction or limitation.  For example ownership of land in fee simple means the land is owned outright as compared to a person who leased land.
Sometimes considered to be synonymous with the word Trustee.  A fiduciary holds certain rights which he or she must exercise for the benefit of the beneficiary. Directors are regarded as being in a fiduciary relationship with their company. Employees are also regarded as being in a fiduciary relationship with their employer.
Financial Services Authority ("FSA")
The FSA is the UK 's independent non-governmental body that has been given statutory powers under the Financial Services and Markets Act 2000 to regulate the financial services industry in the UK. The FSA has been given a wide range of rule-making, investigatory and enforcement powers in order to meet its four statutory objectives of maintaining confidence in the financial system, promoting public understanding of the financial system, securing the appropriate degree of protection for consumers, and reducing the extent to which it is possible for a business to be used for a purpose connected with financial crime (i.e. money-laundering). The Cayman Islands equivalent of the FSA is the Cayman Islands Monetary Authority.
Fixed Charge
A form of security granted over specific assets, preventing the debtor dealing with those assets without the consent of the secured creditor. It gives the secured creditor a first claim on the proceeds of sale, and the creditor can usually appoint a receiver to realize the assets in the event of default.
Those assets that are attached to or are part of a building, or are fixed to land.
Floating Charge
A form of security granted to a creditor over general assets of a company which may change from time to time in the normal course of business. The company can continue to use the assets in its business until an event of default occurs and the charge crystallises. If this happens, the secured creditor can realize the assets to recover his debt, usually by appointing a receiver, and obtain the net proceeds of sale subject to the prior claims of any preferential creditors.
That action that a lender will take to repossess and sell a piece of property for defaults in mortgage payments.
Fraudulent Preferences
In the event of the winding up of a company any conveyance, mortgage, delivery of goods, payment, execution or other act relating to the property of a company that has been made or done by way of undue or fraudulent preference of the creditors of the company shall be invalid.
Freezing Order
Court Order preventing the disposal of assets. Such an Order may have the effect of preventing continuation of the business.
The seizure of earnings, receivables belonging to a debtor that are in the hands of a third party. For example, a debtor may obtain a Garnishee Order which requires $100 of weekly wages be deducted by the employer to be paid over to the benefit of the debtor.
Going Concern
Basis on which insolvency practitioners prefer to sell a business. Effectively it means the business continues, jobs are saved, and a higher price is obtained.
That value attributed to a business that is not tangible, but arises from the reputation, expertise, service or some other intangible that attaches to the business, its name, logo or know-how, and makes it have more worth than just the value of its tangible assets.
Grand Court of the Cayman Islands
The Grand Court of the Cayman Islands is the designated court for the purposes of The Companies Law (2007 Revision). From a decision of the Grand Court appeal lies to the Cayman Islands Court of Appeal, and a further and final appeal from the Court of Appeal lies to the London based Judicial Committee of the Privy Council.
A legal commitment to repay a debt if the original borrower fails to do so. Directors may give guarantees to banks in return for the bank giving finance to their companies.
A person who promises in writing to pay a certain debt of a debtor if the debtor defaults
Hive Down
Transfer of a Company's business to a wholly owned subsidiary to facilitate its sale as a going concern.
To mortgage or pledge without delivery of title or possession. To place or leave an item of property in the custody of another.
The act of one party protecting or guaranteeing protection, or freedom from liability, of a third party for actions of that party.
A right or a title in property that cannot be made void or cancelled by any past event, error or omission in the title.
Defined alternatively as a company [or individual] having insufficient assets to meet all debts, or being unable to pay debts as and when they fall due. If a creditor can establish either test, the creditor will be able to present a winding up or bankruptcy petition.
Insolvency Rules
The Insolvency Rules 1986 of the United Kingdom have been adopted in the Cayman Islands except where those Rules are in conflict with Cayman Islands law.
Insolvency Practitioner
A person resident in the Cayman Islands, usually an accountant with insolvency expertise, who is appointed the liquidator of a company. An insolvency practitioner must supply to the Grand Court of the Cayman Islands evidence of insurance cover.
Insolvency Proceedings
Bankruptcy, Administration, Receivership, Liquidation and Voluntary Arrangements etc.
In Specie Distribution
A distribution of a company's assets in their existing form rather than those assets being converted into cash to be distributed as cash.
Intangible asset
An asset with no identifiable physical form (e.g. a contractual right, copyrights, patents and goodwill).
A right or title to, or estate in, any real or personal property.
Interest on Claims
Interest is payable on creditors claim up to the date of liquidation at the contracted rate (if there was no contractual agreement entitling a creditor to charge interest, they cannot claim it).
Interim Dividend/Distribution
A dividend paid to creditors before the liquidation is finalized.
Interim Order
A temporary Court Order intended to be of limited duration, usually until the Court has had an opportunity of hearing the full case and the opportunity of making a Final Order.
The placing of funds in the Courts by a person when there are two or more competing claims for those monies.
Independent reports for banks and other institutions on the financial affairs of the companies and restructuring proposals.
Joint and Several Liability 
The liability of more than one person for which each person may be sued for the entire amount of the damages.
Joint Tenancy
The situation where two or more persons are equally owners of some property.
A formal decision, sentence or Order of a Court.
Leasehold Improvements
Those assets which are attached to a building and cannot be removed from any property being leased.
Legal Charge
A form of security (e.g. a mortgage) to ensure payment of a debt.
Any legal obligation for which a person is responsible.
A lien is a right of possession over goods or property belonging to another, with a right to retain possession until debts due to the possessor are paid. It may be in the form of an equitable charge in favour of a creditor who may sell the property this charged.
Limited Duration Company
The Companies Law (2007 Revision) provides for the registration of an exempted limited duration company, the duration of which is limited to 30 years or less, and a limited duration company will be deemed to have commenced voluntary winding up and dissolution at the end of that period. It was primarily created as a "see through" vehicle for US taxation purposes.
Limited Partnership
Under The Partnership Law (1995 Revision) a Cayman Islands limited partnership "may consist of any number of persons but shall include: (a) one or more persons called general partners, who shall be liable for all debts and obligations of the [partnership]; and (b) one or more persons called limited partners, who shall at the time of entering into such partnership contribute thereto in actual cash payments, a specific sum as capital and who shall not be liable for the debts or obligations of the firm beyond the amount so contributed."
The legal process under The Companies Law (2007 Revision) whereby the assets of a company are realized and distributed to creditors, and then to the shareholders where there are sufficient assets after payment of all the company's creditors.
Liquidation Committee (or Creditors Committee)
The liquidation committee may be appointed by the creditors, shareholders or the Grand Court of the Cayman Islands at any time in the liquidation. The powers include calling for reports from the Liquidator, calling a meeting of creditors or shareholders, making application to the Court for Court supervision of the Liquidator or for orders to enforce the Liquidator's duties, or assist the Liquidator in the conduct of the liquidation. The committee should be no less than three and may consist of creditors, shareholders or their representatives.
A Liquidator is the person (or persons) responsible for dealing with the liquidation of a company. The Liquidator is appointed by the shareholders, the directors if the constitution permits, or the Grand Court of the Cayman Islands.
A dispute that results in formal Court action or a law suit.
The obligation that one person has to contribute in part or in whole to the cost of living of another person.
Mareva Injunction ("Freezing Order")
A court order preventing the disposal of assets. The order takes its name from the Court of Appeal decision in Mareva Compania Naviera SA v International Bulkcarriers SA [1980] 1 All ER 213n.
An alternate dispute mechanism whereby the mediator acts as a facilitator assisting the parties in coming to a mutually agreed settlement. The mediator has no power to make a binding order if the parties cannot agree.
Meeting of Creditors and Members/Shareholders 
The procedures for calling and conducting creditors and members meetings for companies. These meetings can now be held by assembly, or by audio or audio-visual communications, or by postal ballot. A Liquidator has some discretion in calling a meeting of creditors but this can be appealed by a creditor
Otherwise known as a shareholder, the person(s) entitled to dividends after creditors have been paid in full.
Memorandum of Association
The Memorandum of Association together with the Articles of Association forms the constitution of a Cayman Islands company. In the Memorandum of Association the basic characteristics of a company's particular corporate personality are formed such as its name, its objects, the location of its registered office, and in the case of a company limited by shares, a declaration that the liability of its members is limited and the amount of capital with which it proposes to be registered, divided into shares of a certain fixed amount. By special resolution a company may alter its Memorandum of Association. The Articles of Association govern the internal affairs of a company.
Misfeasance is the breach of duty (i.e. the improper performance of some "lawful" act) in relation to the funds or property of a company by its directors or managers. Malfeasance is the commission of some act which is in itself unlawful (e.g. theft of property).
Money Laundering
The primary anti-money laundering law in the Cayman Islands is the Proceeds of Criminal Conduct Law (2004 Revision) under which Money Laundering Regulations have been issued. The Money Laundering Regulations place additional legal and administrative requirements on entities conducting a "relevant financial business". A relevant financial business includes a bank, trust company, insurance company, and mutual funds. It is the legal responsibility of the Cayman Islands Monetary Authority to monitor the compliance of a relevant financial business with the Money Laundering Regulations.
A transfer of an interest in land by way of security, upon the expressed or implied condition that the asset shall be re-conveyed to the debtor when the sum secured has been paid.
The person in whose favour a mortgage is issued; for example a bank.
The person issuing the mortgage; for example a company or individual (see also Grantor).
Mutual Assistance Agreement
A contract agreement between two or more nations in which the fiscal Governments are empowered to take preference over the civil rights of each other's' citizens in ascertaining and collecting crime-related proceeds or tax liability.
Non-Preferential Creditor
A creditor who does not fulfill the criteria for preferential status as defined in The Companies Law (2007 Revision).
Nulla Bona
Unable to locate assets.
A solid affirmation to tell the truth, oftentimes sworn in front of a Notary or Commissioner for Taking Oaths.
Official Liquidator
An insolvency practitioner appointed by the Grand Court Cayman Islands as liquidator of a company, or a liquidator appointed by the shareholders and that liquidation subsequently becomes subject to the supervision of the Court.
Onerous Property
The term "onerous property" in the context of a Liquidation or Bankruptcy applies to unprofitable contracts and to property that is unsaleable or not easily saleable or that may give rise to a continuing liability. Such property can be disclaimed by a Liquidator or Official Assignee but not by a Receiver or Manager..
Ordinary Company
An ordinary company is a Cayman Islands company that is not an exempted company. An ordinary company can be either a resident or a non-resident company. A resident ordinary company may on obtaining the necessary licences carry on business in the Cayman Islands.
Pari Passu
A phrase especially of the creditors in insolvency who (with certain exceptions - for example, secured creditors) are entitled to payment of their debts in shares proportionate to their respective claims.
Under the Partnership Law (1995 Revision) a Cayman Islands partnership is defined as "the relation which subsists between persons carrying on a business in common with a view to profit".
Personal Guarantee
A personal guarantee is where one party guarantees payment of another party's debt. The most common forms are directors' guarantees to banks to meet payment if the company fails to pay moneys owed under a mortgage or debenture. The other common guarantees are for leases or trade accounts.
A written application to the Court for relief or remedy (for example, a petition to wind up a company).
A new company taking on the business and assets of one that is insolvent, usually with the sane directors, leaving the creditors unpaid and unhappy. Anybody wanting to take on the profitable parts of an insolvent company's business should seek proper advice to avoid the various penalties which might apply in such circumstances.
A person who initiates a legal action in Court.  That person may also be referred to as the Claimant, Petitioner or Applicant.  The other person who is being sued is generally called the Defendant or Respondent.
Poll (of creditors)
A voting procedure where both the number of creditors voting a particular way and the value of their debts is considered in deciding if a resolution is approved or not.
Possession Date
That time that is mutually agreed that the person buying property will take ownership, control or possession of it.
A preference is a transaction that has the effect of putting a creditor of a company (or an Individual) in a better position than would have been the case in the event of a subsequent Liquidation or Bankruptcy. In certain circumstances a preference can be challenged by a Liquidator or an Official Assignee (see voidable transactions and voidable securities).
Preferential Creditor
A creditor who is entitled to receive certain payments in priority to other unsecured creditors.
Preferential Payments
Preferential payments represent certain debts defined in Section 162 of The Companies Law (2007 Revision) that shall be paid in priority to all other debts. For example, preferential payments include taxes due to the Cayman Islands Government.
Prima Facie
Latin - on the face of it or at first sight.
Priority creditor
An unsecured creditor entitled to be paid ahead f other creditors (e.g. employees).
A person appointed by another person to represent them at a meeting. A proxy is usually entitled to attend and vote on behalf of the person who appointed them. In an external administration, the appointer is usually a creditor or shareholder.
Proxy form
A prescribed form that must be completed by creditors or shareholders to appoint a proxy for a creditors' or shareholders' meeting.
Privy Council
The London based Judicial Committee of the Privy Council hears appeals from the Cayman Islands Court of Appeal. The Judicial Committee of the Privy Council is the final court of appeal for the purposes of Cayman Islands law.
Pro Bono
Latin - provided for free.
Pro Rata
Latin - to divide proportionately amongst people having a claim.
Promissory Note
An unconditional, written, signed promise to pay a certain amount of money on demand or at a certain date defined in the future.
Proof of Debt
Document submitted by a creditor to the insolvency practitioner giving evidence of the amount of the debt.
Proper Accounting Records
The requirements are set out in the Companies Law (Revision 2004). If a company does not maintain proper accounting records, then on the application of the Liquidator the Court may declare the directors personally liable for the debts of the insolvent company. However, the Liquidator must first prove that the lack of proper accounting records caused the failure of the company.
An individual appointed by the settler of a trust to ensure that the trustee(s) administers and manages the trust assets in accordance with the trust deed and he is often vested with the power to appoint and remove trustees.
Provisional Liquidation
Once a winding-up petition is presented, the Court may appoint a provisional liquidator, the object of the appointment is usually to preserve the company's assets pending the hearing of the petition. The usual grounds for the commencement of a provisional liquidation are that the company's property is in jeopardy or the directors are misappropriating or wasting the company's assets.
Provable Claims
All those debts of a bankrupt outstanding as of the date of the liquidation.
Proven Claims
Claims that have been filed in the proper manner with evidence to prove what is owed and subsequently accepted by the Liquidator and used as the basis for the payment of dividends when there are monies to distribute.
A creditor who claims is referred to as "proving" for his debt, and the document by which he seeks to establish his claim is his "proof".
The term that is used to describe the method by which certain actions in English law should proceed.
Provisional Liquidator
Insolvency practitioner appointed to safeguard a company's assets after presentation of a winding up petition but prior to a winding up order being made by the Grand Court of the Cayman Islands.
An instrument given by a shareholder or creditor enabling another person to attend, speak and vote on the shareholder's or creditor's behalf at meetings called by the liquidator.
Proxy Holder
A person who is authorised to attend a meeting on behalf of someone else.
Public Notice
When required Public Notice is given by publishing the notice in one issue of the Government Gazette.
Latin - amount.
The minimum number of persons that must be present either in person or by proxy, at a meeting of creditors before the meeting is considered to be a properly constituted one and hence can carry on with the business of the meeting.
Real Property 
Immovable property such as a building and land.
The amount of money received from the sale of assets.
Realisation of Security
The firm is also able to assist secured creditors, and advise on the practical problems associated with recovering security and the effects of priority creditors on the value of the security.
The person appointed by a secured creditor holding a fixed charge over specific assets of a company in order to take control of those assets for the benefit of the secured creditor.
Similar to Receiver above, except the Receiver-Manager can manage or operate the company.
Receiver of Rents
A person appointed by the Court to enforce the collection of rent as is specified in the charge on the property.
Receiving Order
An Order handed down by the Court following the successful petition to have a person or company placed into bankruptcy.
"Receivership" is the general term applied when a person is appointed as a Receiver.
Reckless Trading
Directors of a company must not cause or agree to carry on a business likely to create a substantial risk of serious loss to the company's creditors. An action by the Liquidator or Receiver may be brought against the directors for a breach of this duty.
Buying back.
Register of Companies
A company's registered office is that advised to the Registrar of Companies and is where the register of shareholders and directors is held. It is the address where actions can be served, such as a Statutory Demand. It is often the place of business or the office of the company's accountants or solicitors (see also address for service).
Registered Office
A Cayman Islands company must have a registered office in the Cayman Islands at which a writ, notice, order, or other document will be deemed to have been served on the company if served at or addressed to that registered office.
Registrar of Companies
The person appointed under The Companies Law (2007 Revision) whose duties include maintaining the Register of Companies.
The party who responds to a claim filed in Court against him by a Plaintiff or the person who is being sued.  Another term for the Respondent is the Defendant.
Sarbanes-Oxley Act
The Sarbanes-Oxley Act of 2002 is a US law, sponsored by Senator Paul Sarbanes and US Representative Michael Oxley, to strengthen US corporate governance and to restore investor confidence. The law is wide ranging and establishes new or enhanced standards for all US Public Company Boards, management, and public accounting firms. The Act is administered by the Securities and Exchange Commission.
Scheme of Arrangement
With the sanction of the Grand Court of the Cayman Islands the liquidators where a company is being wound up by the Court or subject to the supervision of the Court, and with the sanction of a special resolution of the company where the company is being wound up voluntarily, may pay any classes of creditors in full or make such compromise or other arrangements as the liquidators may think expedient with creditors or persons claiming to be creditors or persons having or alleging themselves to have any claim against the company.
Scheme of Arrangement (Prior to Voluntary Liquidation)
Any Scheme of Arrangement entered into between a company about to be wound up voluntarily and its creditors is binding on the company, if sanctioned by a special resolution of the company, and on the creditors if acceded to by 75% in number and value of the creditors. However, the company or any creditor or shareholder may within 3 weeks from the date of completion of a Scheme of Arrangement appeal to the Grand Court of the Cayman Islands against such Scheme of Arrangement, and the Court may amend, vary or confirm the Scheme of Arrangement as it thinks fit.
The status a creditor has when he has security or a right in some property that he can sell or realize on.
Search and Seizure Order
An order of the Court for the seizure of property or records. In commercial disputes, a plaintiff may obtain such an order, which can effectively close a business down, leading to insolvency.
Secured Creditor
A secured creditor is one who has a charge over property. In a liquidation secured creditors may realise the property subject to the charge, value the property and claim the balance as unsecured, or surrender the charge to the liquidator and claim in the liquidation as an unsecured creditor for the whole debt. Any surplus on realisation must be accounted to the Liquidator.
Securities and Exchange Commission ("SEC")
The US based SEC has broad authority over all aspects of the securities industry and crucial to its effectiveness is its enforcement actions against individuals and companies that break the securities laws of the US through insider trading, accounting fraud, and providing false or misleading information about securities and the companies that issue them. The equivalent authority in the Cayman Islands is the Cayman Islands Monetary Authority.
Something given or pledged to a person who is lending money in order to secure or guarantee payment of that debt.
Segregated Portfolio Company
A segregated portfolio company is an exempted company that may create one or more segregated portfolios in order to segregate the assets and liabilities of the company held within or on behalf of a portfolio from the assets and liabilities of the company held within or on behalf of any other segregated portfolio of the company or the assets and liabilities of the company which are not held within or on behalf of any other segregated portfolio of the company.
The transferring of property to another person or a gift. Under certain circumstances, settlements are void against the Trustee and are brought back into the bankruptcy estate.
Sine Die
Adjourned without giving any future date of meeting or hearing.
Shadow Director
A shadow director under the laws in the United Kingdom is defined as 'a person in accordance with whose directions or instructions, the directors are accustomed to act.' There is no statutory equivalent of a shadow director under the laws of the Cayman Islands. Nevertheless, under Cayman Islands law such a person although not a de jure director might be deemed to be a de facto director. It should be noted that a person is not a shadow director merely because the directors act on the advice given o him in a professional capacity.
Special Resolution
Special Resolution means a resolution approved by a majority of 75% or, if a higher majority is required by the companies constitution, that higher majority, of the votes of those shareholders entitled to vote, and voting on the question.
Specific Charge
A lien or security interest in a specific piece of property that can be distinguished from other pieces of property.  For example, security over a vehicle.
Statement of Affairs
A document prepared by the Liquidator or Receiver on appointment setting out the affairs of the company. The directors have a duty to disclose the affairs of the company to a Liquidator or Receiver.
Statement of Claim
A Statement of Clain with notice of proceedings presented to the Grand Court seeking an order that the company be put into liquidation.
Statement of Realisations and Distributions
A statement prepared in the matter of a liquidation or receivership whereby the realizations and distribution are set out.
Status Quo
The current state of affairs, or current position.
Statutory Demand
A statutory Demand is a demand made by a creditor requiring the debtor to pay a debt within 21 working days or enter into a Compromise with Creditors. Failure to satisfy a statutory demand is evidence of "Inability to Pay Debts".
Stay of Proceedings
The stopping or preventing of legal actions undertaken.
Striking Off
Normally applies to solvent companies but can apply to insolvent companies where no Liquidator is appointed and no creditor has commenced proceedings to have the company liquidated by the Court.
The legal right that a person or corporation has when he pays someone's debt to recover that money from the debtor.
Summary Judgement
A Summary Judgement is where an application is made to the Court to obtain a judgement against a debtor. Once obtained, this can speed the process of putting a company into an Insolvent Liquidation.
Tangible asset
An asset with a physical form (e.g. stock or real estate).
Transaction at an Undervalue
A transaction at an undervalue can be described either as a gift or a transaction in which the consideration or proceeds received are significantly less than the true value. In certain circumstances such transactions can be challenged by the Liquidator
Any process, not necessarily involving formal insolvency, that results n the rescue of underperforming businesses.
Ultra Vires
Latin - without authority.
Undischarged Bankrupt
Someone against whom a bankruptcy order has been made and who has not been discharged from bankruptcy.
Unsecured Creditor
Strictly, any creditor who does not hold security. More commonly used to refer to any ordinary creditor who has no preferential rights, although, in fact preferential creditors will almost always also be unsecured. In any event, the last in the queue, ahead only of the shareholders.
Excessive or illegal interest rates.
Vesting Order
An Order by the Court that gives to a person, possession, control or title of property.
An act done by a person in order to annoy, embarrass or otherwise aggravate that person.
Voidable Charges
A voidable charge is one within a specified period prior to a liquidation and where no new valuable consideration has been given.
Voidable Transactions
A voidable transaction is made when a company is unable to pay its debts within a specified period prior to the liquidation and has a preferential effect. These may in certain cases be voidable against a liquidator.
Voluntary Liquidation
A company may be wound up voluntarily if the company has passed a special resolution requiring the company to be wound up voluntarily.
Winding-up Order
An order made by the Grand Court of the Cayman Islands for the compulsory liquidation of a company.
Winding-up Petition
A winding-up petition is a petition presented to the Grand Court of the Cayman Islands seeking an order that a company be put into compulsory liquidation.
Without Prejudice
Without detriment to rights or claims that may be asserted in the future.
Wrongful Trading
Applied to companies in liquidation where a director allows the company to continue trading in circumstances where the director should have concluded that there was no reasonable prospect that the company would avoid going into insolvent liquidation. The directors involved may be made personally liable to make a contribution to the company's assets.
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