Vol 22 (2025) - Issue 6

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In the Matter of Axia Network Foundation (In Voluntary Liquidation)

Synopsis
In In the Matter of Axia Network Foundation (In Voluntary Liquidation), the Cayman Islands Grand Court (the 'Court') brought the voluntary liquidation of two companies that operated in the digital asset space under court supervision pursuant to section 131 of the Companies Act (as revised) (the 'Act'). The Court brought the liquidations under its supervision as it was satisfied that this would facilitate a more effective liquidation
of the companies in the interests of the stakeholders as a whole because (among other things): (i) the multijurisdictional and complex issues that may arise (particularly in respect of the status of crypto currency coin holders) meant that a Court based process could operate to reduce the likelihood and magnitude of disputes; (ii) official liquidators have greater investigative powers than voluntary liquidators and, because they owe duties to the Court, should provide stakeholders with more confidence in the liquidation process; and (iii) foreign recognition of the liquidations that may be
required to facilitate asset recoveries were likely to be more readily available to official liquidators.
The Axia decision provides important guidance as to the factors that the Court will evaluate in determining applications for Court supervision and highlights the benefits of a court supervised liquidation as opposed to a voluntary liquidation in the Cayman Islands. Voluntary liquidations serve a purpose and are an efficient and economic option for many solvent liquidations but, in certain cases, Court supervision can be more efficient, expeditious or economic.