Bermuda, the British Virgin Islands and the Cayman Islands all have legislation that enables a company to present a scheme of arrangement to restructure its debts.
One of the defining features of a scheme of arrangement carried out under the relevant legislation in each jurisdiction is the ability to cram down dissenting creditors or members (or classes of them, as the case may be) if the requisite statutory majorities are satisfied and Court sanction of the proposed scheme is obtained.
Introduction
The first stage in any restructuring by way of a scheme of arrangement in the Cayman Islands involves meetings of such classes of creditors or shareholders (as the case may be) to consider, and if thought fit, approve the terms of the scheme. An application to Court is required for orders to be granted for convening such meetings. If, at these meetings, the requisite statutory majorities are satisfied, the second stage involves obtaining Court sanction for the proposed scheme to become effective.
Does a bondholder have standing to petition for winding up? In the landmark decision of Cithara Global Multi-Strategy SPC v Haimen Zhongnan Investment Development (International) Co.
The inter-relationship between disputed debts, arbitration agreements and winding up proceedings has come up again this time before the Privy Council in Sian Participation Corp (In Liquidation) v Halimeda International Ltd [2024] UKPC 16. In delivering this important judgment, the Privy Council looked closely at the dividing line between two areas of public policy, namely insolvency and arbitration.
Background
In this guide, we explain what to do when you no longer need a company that has been incorporated or registered in the British Virgin Islands (Company). Assuming the Company is solvent, you have two options: (1) arrange for the Company to be voluntarily liquidated and dissolved (Liquidated); or (2) leave (or apply for) the Company to be administratively struck-off and dissolved (Administratively Dissolved). For the reasons set out below, we usually recommend a Company is Liquidated, rather than Administratively Dissolved.
A recent judgment of the United Kingdom Supreme Court in Brake & Anor v The Chedington Court Estate Ltd [2023] UKSC 29 (10 August 2023) is likely to be a welcome decision for liquidators and trustees in bankruptcy in setting clear boundaries as to who has standing to challenge their decision-making in corporate or personal insolvency contexts.
The BVI is a leading international financial centre, and BVI companies play a significant role in the flow of capital across the global economy. As global economic conditions become more challenging, lenders are increasingly reliant on formal insolvency procedures to realise value from distressed assets. As a result, the past year has seen a marked increase in the use of statutory demands against BVI companies as a precursor to an application to appoint liquidators. That trend is set to continue with the ongoing uncertainty in global markets.
The recent Cayman Grand Court ruling of In the Matter of ECM Straits Fund I, LP ("ECM Straits Fund") helpfully clarifies that voluntary liquidators of an Exempted Limited Partnership ("ELP") can be subject to court supervision, with the result that voluntary liquidators can be granted powers that are usually reserved for court-appointed liquidators.
Introduction
On 5 October 2022, the UK Supreme Court delivered its judgment in the case of BTI 2014 LLC v Sequana SA & Ors [2022] UKSC 25. This judgment arose from an appeal brought by BTI 2014 LLC against a decision of the English Court of Appeal in 2019.
This briefing note provides an outline of the different processes of voluntary winding up and striking off under the Companies (Guernsey) Law, 2008 (as amended) (the “Law”).
Voluntary Winding Up