Dissolution and Liquidation

Termination of a Cayman Islands company

There are two methods available to terminate a Cayman Islands company: (1) a strike off and (2) a voluntary winding up.

Strike off

A strike off is the quickest method of termination of a Cayman Islands company. It is typically used for companies that never commenced trading.

Advantages of the Strike off Method

  • Terminating a company by way of a strike off is quicker than a voluntary winding up.

Disadvantages of the Strike off Method

  • The company may be restored to the register of companies at any time within ten years of the date of strike off. Regarding the parties who may seek to restore the company to the register of companies and period in which restoration may be sought, the Companies Law provides that any company or any member or creditor of the company who feels aggrieved by the company having been struck off the register of companies, the Cayman Islands court may, on application by such company, member or creditor made within two years or such longer period not exceeding ten years, restore the company to the register of companies.
  • Should a company be restored to the register having been struck off previously, the company shall be deemed to have continued in existence as if its name had not been struck off. In practice, this means that if a creditor has a claim against the company and is successful in the restoration of the company to the register, that creditor can file such claim against the company once the company has been restored.
  • The striking off the register of any company will not affect the liability, if any, of any director, manager, officer or member of the company and such liability shall continue and may be enforced as if the company had not been dissolved.
  • Any property vested in or belonging to any company struck off the register will vest in the Cayman Islands government and subject to disposition.

Voluntary Winding Up

A voluntary winding up is governed by a statutory process, the steps for which are outlined in the Companies Law of the Cayman Islands. The process typically takes 3 to 5 months to complete.The voluntary winding up procedure is typically used for companies that previously traded, for example an investment fund which may have a history of creditors and, therefore, possible claims against the company.

Advantages of the Voluntary Liquidation Method

  • the company has a sense of finality i.e. once the statutory process is fully completed, the company ceases to exist and cannot be restored by any creditor, director, officer or member of the company. Under the strike off method of termination, however, a company can be revived and restored to the register of companies as described above.
  • creditors are provided with a notice, through publication in the Cayman Islands Gazette. Creditors will therefore have an opportunity to present their claims to the company within a specified period of time. No such notice is given to creditors under the strike off method of termination.