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Komfie Manalo, Opalesque Asia:

The Cayman Islands Court of Appeal has rejected Skandinaviska Enskilda Banken's (SEB) appeal against Justice Nigel Clifford's decision to order that redemption proceeds of approximately $8m should be repaid to the liquidation estate of troubled hedge fund Weavering Macro Fixed Income Fund Limited.

International law firm Ogier explained in a briefing that Weavering was placed into liquidation in March 2009 when it was discovered that its investment manager, Magnus Peterson, had masked large losses suffered through options trading with worthless swap transactions entered into with affiliated counterparties.

Shortly before the liquidation commenced, Peterson directed that redemption proceeds of approximately $8m be paid to SEB leaving redemption payments to other creditors unsatisfied.

The Grand Court and CICA both determined that the Redemption Payment was a voidable preference under Section145 of the Cayman Companies Law, that had to be returned to the liquidation estate. A voidable preference is a payment made to a creditor within six months of the commencement of a liquidation where the company intended that the creditor be preferred over other creditors.

Court re......................

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