Cayman courts clear up hedge fund documents

| 12/04/2011

(Hedge Fund Review): Investors and their lawyers have learned to refine and clarify hedge fund documentation as the result of the financial crisis and several decisions emanating from the Cayman Islands courts. Jeremy Walton, a partner at Cayman Islands’ law firm Appleby who specialises in litigation said, “The fundamental messages coming out the Cayman courts, and throughout the offshore world, is one emphasising the clarity of documentation. Contract is king,” he said. Walton points to a recent Privy Council decision in the Strategic Turnaround case as the clearest indication that investors cannot enforce redemption rights through a winding-up petition.

Hedge funds, through provisions in constitutional documents which make up the contract between the fund and investor, allow redemptions and the payout of the proceeds of that redemption to be suspended, confirmed Walton.

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