Ben Valentin KC has successfully appeared for a leading cancer scientist in proceedings in the Cayman Islands to gain control of his shares in a Nasdaq-listed corporation. The case affirms the Grand Court’s decision to wind up an Exempted Limited Partnership (ELP) on just and equitable grounds, and is a rare example of such an order being made in respect of an ELP.
The Petitioner, an eminent scientist, had developed a ground-breaking CAR-T therapy for the treatment of myeloma. In 2014, his Chinese employer granted him a 10% shareholding in anticipation of the company’s IPO. The arrangement was subsequently amended to promise the Petitioner a similar stake in a Cayman company, which was to be initially held in an ELP structure, on the assurance that, upon the conclusion of the IPO, the Petitioner would be entitled to receive his shares. Following the IPO, the ELP’s General Partner (GP) refused to release the shares. At trial, the Grand Court (Doyle J) held (in June 2022) that the GP’s conduct entitled the Petitioner to wind up the ELP on just and equitable grounds.
On appeal, the GP contended, among other things, that winding up was unavailable because the contractual documents governing the ELP precluded it.
The Court of Appeal (Goldring P, Field and Birt JJA) dismissed the appeal, holding that the GP’s reliance on the contractual documents, despite the repeated assurance given to the Petitioner that he would receive his shares, would involve a breach by the GP of the duty of good faith applicable to all LLPs under s.19 of the Exempted Limited Partnerships Act (ELPA).
The decision becomes a leading case on the availability of just and equitable winding up of an ELP. As Field JA noted, the Cayman Islands ELP is the “new kid on the block” and, in future cases, it is to be anticipated that such petitions may be advanced on the basis of an expansive and flexible interpretation of the ELPA, taking full account of the special nature of an ELP (and less account of overseas jurisprudence).
Ben Valentin KC appeared with Bhavesh Patel of Travers Thorp Alberga for the Petitioner.
A copy of the judgment in Aquapoint L.P v Xiaohu Fan is available here.