The expression “soft wind-down” is used in the corporate hedge fund context to describe the operating state where a fund is still under the control of its directors and where the investment manager is conducting an orderly realisation of the portfolio with a view to redeeming out all remaining investors.  The fund is not formally in liquidation – a specific statutory process in Cayman where the directors’ powers cease and liquidators assume control with a view to shutting the company down.  Over the past several years, a number of hedge funds have been faced with large numbers of redemption requests with the consequence that the economic viability of those funds has come into question.  Faced with little alternative, those funds have imposed suspensions and instituted soft wind-downs.  For some funds, the duration and conduct of the soft wind-down procedures has proved unsatisfactory to investors with the result that a number have ended up in court.  In recent decisions, the Cayman court has indicated that it will grant an order to place a corporate hedge fund into formal liquidation on the statutory grounds of it being “just and equitable” if the fund has lost its sub-stratum.  Put another way, an open ended hedge fund which has represented to investors that they will get periodic liquidity should not be implementing an indefinite suspension of redemptions coupled with a long term soft wind-down in the absence of proper disclosure.  In a guest article, Tim Frawley, a Partner at Maples and Calder, offers a detailed discussion of: the definition of “disclosure” in the hedge fund context; the rationale for disclosure; the evolution of the purpose of hedge fund offering documents; Cayman Islands statutory and common law with respect to misrepresentation and disclosure; considerations in connection with disclosing the possibility of a soft wind-down; and recent Cayman and BVI caselaw bearing on disclosure considerations.