Cayman Court winds up SPC on equitable grounds
Grand Court of the Cayman Islands has ordered the winding up of the captive insurance company of two Virginia based not-for-profit health care systems. The order to wind up Virginia Solution SPC was made on the “just and equitable ground”.
The court did so on the basis that the captive was a corporate quasi-partnership, and the relationship of mutual trust and confidence between the two members had irretrievably broken down.
The court found this was the fault of captive member Augusta Health Care Inc. It had acted in bad faith in refusing to follow the actuary’s advice with respect to the amount of dividends to be declared. This was part of a documented plan to drive successful petitioner Valley Health System, the other member with a 69% economic interest in the captive, out of it.
It aimed to be the “last man standing” and receive a financial windfall as a result. According to the court, this was shown in a six-part document by Augusta’s CEO, Mary Mannix, who was one of the captive company’s two directors.
“The Confidential Debrief laid bare the insincerity of Ms Mannix’s evidence - in - chief that Augusta ‘was not guided by greed’ but was acting consistently with the company’s conservative principles when deciding to approve dividends at the historical level and consistently with the dividend policy…” the court found.
According to law firm Campbells, which acted for Valley Health System, it is the first occasion on which the Cayman court has exercised its just and equitable jurisdiction to wind up a captive insurance company – “thereby confirming the well-established principle that the court’s just and equitable jurisdiction is wide and untrammelled”.