Judgment

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Statute	Sections cited	Mentions
Companies Act	85	2

In the Grand Court of the Cayman Islands — Civil Division

Cause No. G 0448/1994

In the Matter of Universal Tours Limited - Judgment

Before
Harre CJ

Judgment delivered 1994-12-29

IN THE GRAND COURT OF THE CAYMAN ISLANDS
HOLDEN AT GEORGE TOWN, GRAND CAYMAN
CAUSE NO. C 448/94

IN THE MATTER OF UNIVERSAL TOURS LIMITED

AND

IN THE MATTER OF THE COMPANIES LAW

For the petitioner: Mr. Olivaire Watler
HARRE CJ.

In my judgment the purpose and effect of S. 85 of the Companies Law (R) is identical with that of S. 425 of the English Companies Act 1985 which in turn reenacts S. 206 of the 1948 Act. It is to empower the court, on application, to order a meeting of creditors or members and, upon such meeting having been held, to sanction a compromise or arrangement approved by a three fourths majority so that it becomes binding on the company, its members and creditors, and any liquidator and contributories.

In this application it was argued that the section can also be used by analogy to obtain the sanction of the court for an arrangement approved by the sole shareholder and the only known creditor without any of this procedure having been gone through. It became clear during the submissions ably made by Mr. Olivaire Watler that the real purpose of the application was to obtain consequential orders under S.
86, in particular an order that the Cayman company involved in the arrangement he dissolved without winding up.

That in my view is not the purpose of SS 85 and 86 at all. S.86 presupposes that an order sanctioning a compromise or arrangement has been made and that order is only properly made in accordance with the procedure set out in S. 85. The purpose of S. 85 is to remedy, by recourse to the procedure thereby prescribed, the absence of that individual agreement by every member of the class to be bound by a scheme which would otherwise be necessary to give it validity.

In this case, all parties agree to what is proposed. It is unnecessary to invoke S. 85 and this application is misconceived. It is consequently dismissed. It is for the parties in such circumstances to devise the arrangements which are binding upon them.

That said, it may be of some use to those concerned if I end this ruling by saying against that my refusal of sanction under S. 85 is purely for the reason that I think that it is unnecessary, and not because of any perceived objection by the Court to the arrangement.

29th December 1994
G.E. Harre
Chief Justice

Cause Number	G 0448/1994
Court	CIGC (Civ)
Judge	Harre CJ
Parties	In the Matter of Universal Tours Limited - Judgment
Judgment Date	1994-12-29
Subject	Companies Law section 85 and 86; Scheme of arrangement; Sole shareholder and creditor; Dissolution without winding up
Filename (current)	94-12-29_universal_tours_limited_in_re.pdf