Oiling the wheels of commerce: a reminder of the requirements for sanctioning a scheme of arrangement in the Cayman Islands Background Key legal principles Further judicial observations Conclusion

The recent decision of the Grand Court of the Cayman Islands in In the Matter of Logan Group Company Limited provides a useful reminder of the principles governing the sanctioning of schemes of arrangement under section 86 of the Cayman Islands' Companies Act.

The Court's clear articulation of the hurdles a company must overcome, together with clarification of the Court's approach to exercising its discretion at a sanction hearing, will serve as useful practical guidance to insolvency practitioners advising distressed companies in relation to a proposed scheme, particularly those with complex cross-border debt structures.

Logan Group Company Limited, a company incorporated in the Cayman Islands, sought the court's sanction of a proposed scheme of arrangement in parallel with a related inter-conditional scheme in Hong Kong. A convening hearing took place in May 2026 and the sanction hearing took place on 4 August before Justice Doyle. Drawing on well-established jurisprudence in relation to the requirements of a successful scheme of arrangement, Justice Doyle sanctioned the scheme, applying an "8 hurdle" framework as set out below.

In his judgment, Justice Doyle set out the principles the court will apply in determining whether to sanction a scheme, citing Cayman Islands, Hong Kong and English authority. He confirmed that the following eight main hurdles must be cleared in order to satisfy the court that it is appropriate to sanction a scheme:

1.

Compliance with the convening order - has the company complied with the terms of the convening order?

2.

Statutory majority - has the requisite 75 per cent statutory majority been achieved?

3.

Fair and adequate representation - was the class of scheme creditors fairly and adequately represented by those who attended the scheme meeting?

4.

No coercion of the minority - was the statutory majority acting bona fide and not coercing the minority in order to promote interests adverse to those of the class whom they purported to represent?