Global Perspectives on Insolvency, Restructuring & Dispute Resolution 

As primarily offshore lawyers, we speak on a daily basis with onshore counsel, banks, asset managers, trustees, corporates, insolvency practitioners and individuals around the world. Those conversations give our Global Insolvency & Dispute Resolution Practice Group a unique perspective on the different market trends and their regional impact in 2022.

Welcome to the February 2017 edition of our wealth and trusts quarterly digest. The digest provides up to date commentary and analysis on key sector developments. Our tax, wealth and trusts teams are able to provide a wide ranging service to assist you and your clients in responding to market trends and legal developments. We would welcome the opportunity to discuss any concerns you may have and always welcome feedback on the content of our publications. Feature When can trustees exercise their right of retention?

Under the BVI Business Companies Act, 2004 (the “Act”) there are two types of court supervised arrangements.

The Insolvency Act 2003 of the British Virgin Islands (the “IA”) provides that the netting of financial contracts is legally enforceable notwithstanding any provisions of the IA or the Insolvency Rules. Significantly, this means that where an insolvent entity that is party to a financial contract goes into liquidation, what might otherwise be a voidable transaction will be upheld if carried out pursuant to a netting agreement.

Reports last week of the significant increase in corporate insolvencies and voluntary liquidations in England and Wales for Q2 demonstrate the combined impact of government COVID-19 support being withdrawn, soaring energy and fuel costs, and weakening demand – and are being reflected in the nature of the instructions coming into our global jurisdictions from distressed companies across the globe.

As well as issuing claims in mistake and restitution in the BVI Commercial Court and the US State Supreme Court, the liquidators of Fairfield Sentry Limited (“the Fund”) also petitioned for and, on 22 July 2010 obtained, Chapter 15 recognition in the United States Bankruptcy Court for the Southern District of New York.

The uncertainty that has descended on global economic markets brought about by the global covid-19 pandemic has been widespread and unprecedented. Anyone looking for clear wisdom on the likely trends in restructuring as we look now to the second half of 2022 and beyond may find the milky darkness of a Magic 8-ball a better barometer of future forecasting.

Here, we provide an overview of the offshore restructuring landscape in light of governmental fiscal stimulus measures introduced due to coronavirus either being reduced, withdrawn or, in some cases, never being put in place.

Liquidators were appointed over Fairfield Sentry Limited, Fairfield Sigma Limited and Fairfield Lambda Limited (together “the Funds”) by orders of the BVI High Court dated 21 July 2009, 21 July 2009 and 23 April 2009 respectively. Fairfield Sentry Limited was the largest “feeder” fund to Bernard L Madoff Investment Securities LLC (“BLMIS”) and invested approximately 95% of its assets with BLMIS. BLMIS was placed into liquidation proceedings in the United States in December 2008, after it was revealed that Bernard Madoff operated BLMIS as a Ponzi scheme for many years.

Introduction

The current geo-political climate is contributing to the rapid rise to inflation rates in many countries around the world. Governments have reacted with an inevitable increase to interest rates to try and offer some form of counterbalance to rising costs in an effort to stymy localised, and more widespread, economic recessions.

The First Creditor Driven Schemes

The Commercial Court has very recently sanctioned four schemes of arrangement pursuant to section 179A of the BVI Business Companies Act 2004. These were the first two creditor-driven schemes to be proposed and sanctioned in the BVI. There has been one other scheme proposed and sanctioned in the BVI but this was a member’s scheme and was altogether more straightforward. Ogier BVI was instructed in relation to all four schemes.

The First Scheme