Did you know that a trust could also assist in the winding down phase for your Cayman structure? The liquidating trust is a purpose trust established to hold, manage, and distribute assets through a winding-up, restructuring, or asset realisation process. It can offer the flexibility and control that formal proceedings often cannot.
Where is it used
For funds carrying illiquid or hard-to-value assets, a liquidating trust allows for orderly realisation at the right pace – without being bound by the rigid processes and costs associated with formal liquidation proceedings. Existing stakeholders (such as investors or creditors) step into beneficiary roles, while a professional trustee drives the process.
In distressed situations and credit workouts, the structure provides a neutral, accountable home for assets – potentially avoiding prolonged formal proceedings while keeping stakeholders protected.
How it works
The settlor – typically the fund or company – transfers assets to a professional trustee, who assumes legal title and oversees realisation.
- The trustee actively manages the asset realisation process, make distributions, and are accountable to beneficiaries throughout.
- Beneficiaries hold equitable interests and receive proceeds as assets are monetised.
- An enforcer or protector can be appointed to provide an additional layer of oversight and comfort to key stakeholders.
Why it matters
The liquidating trust sits at the intersection of flexibility and fiduciary rigour. It gives clients control over timing, asset management, and distributions – without unnecessary friction.
KEY CONTACTS
