The Appleby 2012 offshore round-up: fund disputes

Welcome to Appleby’s review of the key decisions handed down in the litigation involving investment funds in the leading offshore jurisdictions during 2012, compiled by members of our Litigation & Insolvency Practice Group in Bermuda, the British Virgin Islands, the Cayman Islands, Jersey, Guernsey and the Isle of Man. Equivalent updates are available in the areas of insolvency & restructuring, company law, civil procedure and trust litigation. Copies may be obtained from our website or from your usual Appleby contact.

During the year we saw further decisions on three classic themes surrounding investors in funds who redeem their investment. Can they petition? What is their status as compared with other creditors? Can money paid to them before the fund’s collapse be clawed back? But the courts have also had to grapple with some additional and novel issues, including whether redeeming investors’ claims can be satisfied by distribution of assets in kind, rather than cash. The much used device of the side letter has also come in for scrutiny, and we have started to see some cases involving a type of entity now common in most of the offshore jurisdictions, namely the segregated account or portfolio company. Disputes over remuneration arrangements for fund managers have also given rise to judicial decisions…

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