Smellie J
OPEN COURT
IN THE GRAND COURT OF THE CAYMAN ISLANDS
CAUSE NO. 309 OF 1997
IN THE MATTER OF THE COMPANIES LAW (1995 REVISION)
AND IN THE MATTER OF THE TRUSTS LAW (1996 REVISION)
AND IN THE MATTER OF CHEMICAL INTERNATIONAL TRUST CORPORATION LIMITED
AND IN THE MATTER OF CHASE MANHATTAN TRUST CAYMAN LTD.
APPEARANCE:
Miki Jafa and Nick Joseph of Hunter and Hunter for the Applicants.
RULING
I have before me an application which seeks, primarily, the sanction by the Court of a scheme of arrangement for the merger or amalgamation of the two companies intituled in this action ("the applicant companies"). The application is brought by way of petition jointly on behalf of the applicant companies pursuant to section 86 of the Companies Law (1995 Revision), ("the Law").
Both applicant companies are Cayman Islands subsidiaries or affiliates respectively of Chemical Banking Corporation and Chase Manhattan
Corporation, very large and well-known banking institutions which operate world-wide and which are headquartered in the United States.
In a widely-publicised take-over, Chemical Banking Corporation has acquired Chase Manhattan Corporation to form, by merger, one of, if not the largest, banking and trust management groups in the world.
The fact of that merger predicated the merger in Cayman of the applicant companies.
The present petition, in seeking the Court’s sanction seeks, in effect, to obtain the several benefits of section 86 of the Law by means of that sanction.
Not least among those benefits, is the automatic transfer to the transferee company of the whole of the undertakings, property and liabilities of the transferor company, without the need for formal negotiations and arrangements being entered into with third parties who would be affected - such as creditors, shareholders, service providers and so on.
Subject to notice of the intended petitions being given to any such third parties, leave had been earlier granted to bring this joint application on by way of petition.
A further immediate benefit of the court’s sanction pursuant to section 86 would be, in this case, the dissolution, without the need for winding-up proceedings, of the transferor company. That, of the applicant companies
will be Chemical International Trust Corporation Limited. This result, although in light of the ultimate takeover of the Chase Group by the Chemical Group might seem anomalous, is explicable against the background that the Chase Group enjoys better goodwill world-wide and thus the continuation of the Chase name, for the merged entity in Cayman.
The principal undertaking of each applicant company has been that of corporate trustee. Each has served as trustee for a number of trusts settled by clients from many parts of the world.
It is intended by the applicant companies therefore that the sanction of the merger will serve also to sanction the transfer of the duties and liabilities of trustee. However, as the Law in section 86 speaks of sanctioning the transfer of “liabilities” and not specifically of “duties”, Miss Jafa seeks specific directions for the bringing of a separate application under section 10 of the Trusts Law (1996 Revision), for an order of the court appointing the transferee company as trustee in substitution for the transferor company. That will serve to cover all aspects of the respective liabilities, rights and duties attaching to the office of trustee.
Those directions are given now and that application will follow immediately on the hearing of this petition, in Chambers.
I have also noted the decision earlier pronounced, sanctioning the merger of the applicant companies pursuant to section 86 of the Law.
MINUTE OF ORDER AFTER APPLICATION PURSUANT TO SECTION 10 OF THE TRUSTS LAW (1996 REVISION)
(TAKEN IN CHAMBERS)
Being satisfied that it is expedient and in the interests of the better management and conservation of the assets of the respective trusts under the trusteeship of Chemical International – because of the difficulties which would otherwise follow – I direct that individual applications need not be made in each of them, for the transfer of the trusteeship to Chase Cayman as the newly merged entity. Accordingly, I grant the formal order in terms as amended under section 10 of the Trusts Law (1996 Revision) for the appointment of Chase Cayman as Trustee respectively in each Trust.
The foregoing order is best read in the context of section 10 subsection (1) itself. As I am told that this may be the first time such an application is being made under this section, I set it out here for reference:
“10(1) The Court may, whenever it is expedient to appoint a new trustee or trustees, and it is found inexpedient, difficult or impracticable so to do without the assistance of the court, make an order appointing a new trustee or trustees either in substitution for or in addition to any existing trustee or trustees or although there is no existing trustee.”
The evidence of Mr. Worsley filed therein demonstrates that the several trusts which remained with Chemical International as Trustee provided at
least four categories of procedures for the removal and replacement of trustees, any of which, if employed literally, would have resulted in considerable expense to the respective trust funds.
Having regard to the fact that the merger has been so widely publicised and the indubitable qualities and abilities of the transferee company as trustee and, as well, to the fact that no objections whatsoever have been raised by any person interested following on the giving of notice as earlier directed in the context of the applications under section 85 and 86 of the Companies Law, the case is one which presented itself as particularly suited to the exercise of the discretion vested by section 10(1) of the Trusts Law.
Hence the orders set out above, which I now direct are to be formally presented for signature and filing.
Anthony Smellie
JUDGE OF THE GRAND COURT
Dated this 16th day of December 1997