The Cayman Islands Court of Appeal has settled certain questions on the suspension of redemption, according to Hedge Funds Review. The decision in Strategic Turnaround Master Partnership v Culross Global has clarified the meaning of redemption in an investment fund context and when a member is actually out of an investment fund.

After looking at the articles of association, the court found that redemption was a process which was not completed until the member's name was removed from the register of members and the member's shares were available for re-issue.

This decision is particularly important given the present tidal wave of redemption requests.

In reaching its decision, the court distinguished between the Cayman Islands’ statutory provision on winding-up, which applies a cash flow test for insolvency, and the balance sheet test. Investors wanted to use the English Insolvency Act 1986, which has a balance sheet test, but failed.