Update

DD Growth: Privy Council extends the scope of clawback remedies

Another important judgment has been handed down by the Privy Council in relation to redemptions out of Cayman Islands investment funds, following the decision in Pearson v Primeo Fund earlier this year. Unlike the Primeo Fund example, redemption proceeds had been paid on this occasion and the Privy Council was tasked with determining the lawfulness of such payments.

The liquidators convinced a majority of the Board of the Privy Council that substantial redemption payments made to an investor (RMF) were payments made out of capital at a time when DD Growth was insolvent. The liquidators successfully argued that the payments were unlawful and the Grand Court will now have to decide whether redemption proceeds should be returned to the DD Growth estate by RMF as a constructive trustee.