Should a petitioning creditor who presses for an immediate winding up order be penalised in costs?

In typical adversarial proceedings brought in the Cayman Islands, the Court will usually order that the unsuccessful party bears the successful party's costs. This is often referred to as the 'loser pays' model. However, in a recent judgement In the matter of Abraaj Holdings (FSD 95 of 2018, Unreported 4 January 2019), the Grand Court confirmed that the test is different in insolvency proceedings. The Grand Court has confirmed that a petitioning creditor who unsuccessfully argues for an immediate winding up order should not be penalised in costs unless he acted unreasonably.

The Grand Court was clear that it does not wish to discourage a petitioning creditor from expressing entirely legitimate views. Therefore, in an insolvency context, petitioning creditors who have not acted unreasonably should not be subject to an adverse costs order, even if they pursue an unsuccessful application.