*** The content of this post is contributed by Conyers Dill & Pearman’s Cayman Office.  We thank Ben Hobden, Erik Bodden and the entire Conyers team for their contribution.  Lowenstein Sandler does not practice in the Cayman Islands.

In In the matter of Trina Solar Limited*, the Grand Court had at first instance refused an interlocutory application made by a group of dissenting shareholders (the “Dissenters”) for worldwide freezing orders over the assets of the company in question pending the outcome of fair value appraisal proceedings, commenced pursuant to section 238 of the Cayman Islands Companies Law.  The Dissenters had applied to the Grand Court because the company had agreed to transfer many of its assets in its subsidiaries to other companies in China, ostensibly to progress the company’s post-merger restructuring. While the Dissenters had received an interim payment from the company following a separate application to the Grand Court, the Dissenters argued that the company’s actions would have the effect of significantly reducing the assets of the company so that it would ultimately be impossible for the company to satisfy in full any judgment of the Grand Court following the substantive trial.  The Grand Court declined to grant the injunction.

Unhappy with the Grand Court’s decision, the Dissenters took their case on to the Cayman Islands Court of Appeal (the “CICA”) which, while finding that the Dissenters had crossed the “jurisdictional threshold” so as to be entitled to ask for the grant of an injunction on the terms they had sought, determined that the company’s evidence had proved the transactions in question were not undertaken for less than proper consideration or on terms that were prejudicial to the company. Further, the fact that the company had made a provision for payment to the Dissenters, based on a realistic assessment of the company’s liability to the Dissenters, was enough to avoid the need for an injunction. The CICA held that the provision made by the company did not need to be for the full amount claimed by the Dissenters with reference to their expert advice, but a “reasonable and prudent provision” made after taking advice from legal and valuation advisers and with the company “forming a balanced and cautious view of the risks of the litigation”. No injunction was granted by the CICA, but the decision remains a helpful guide to companies facing similar litigation.

* CICA 26 of 2017 (unreported, 9 February 2018)

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