In Servis-Terminal LLC v Drelle [2025] EWCA Civ 62, the English Court of Appeal held that a bankruptcy petition cannot be presented based on an unsatisfied foreign judgment where the foreign judgment has not been recognised in that jurisdiction. This update considers the effect that decision may have on statutory demands and applications for the appointment of liquidators based on unrecognised foreign judgments in the British Virgin Islands.
The Hierarchy of the Courts of the Eastern Caribbean
The Privy Council endorsed the Commercial Court's approach in the British Virgin Islands (BVI) in staying insolvency proceedings, even when faced with a pre-existing arbitration agreement, only when a debt is genuinely disputed on substantial grounds.
Introduction
The recent ex-tempore judgment of Kawaley J in Atom Holdings1 in the Grand Court of the Cayman Islands serves as a timely reminder to practitioners and industry participants alike that obtaining an adjournment of a winding-up petition2 requires cogent evidence demonstrating good reason(s) for delaying what is otherwise the collective right of creditors to seek relief via court intervention.
In the recent British Virgin Islands (BVI) case of Parles AS & Daniel Perner v Winsley Finance Limited (BVIHCM2022/0123, 29 March 2023), the Honourable Madam Justice Mangatal granted an application brought by two unsecured creditors for a Chabra freezing injunction against a BVI company in aid of foreign insolvency proceedings in Czechia. In this article, we look at the reasoning employed by the BVI Court in reaching its decision and consider the wider significance of the judgment to insolvency practitioners and creditors dealing with assets in the BVI.
The U.K. Financial Services and Markets Act 2023
The question of whether a British Virgin Islands Court can order the examination of foreign persons in the liquidation of BVI companies has been the subject of two recent conflicting decisions of the Commercial Division of the High Court. As such, the answer to the question is likely to remain uncertain until it has been resolved by the Eastern Caribbean Court of Appeal.
The Statutory Framework
Section 284 of the Insolvency Act, 2003 provides that:
Bed Bath & Beyond, the home goods retailer, has filed bankruptcy under Chapter 11 and plans to conduct liquidation sales and close all of its brick-and-mortar stores by June 30, as reported by The New York Times. The retailer points to an inability to adjust to the growth of online shopping as a reason for its downfall.
On February 13, 2023, Ultra Petroleum Corporation (“Ultra”) filed a petition for a writ of certiorari with the US Supreme Court seeking review of the Fifth Circuit’s October 2022 ruling that, in solvent-debtor cases, debtors must pay unsecured creditors applicable contractual make-whole premiums and postpetition interest at contractual default rates in order for such unsecured creditors to be considered unimpaired.
The U.K. government has published its much-anticipated proposals for regulating the cryptoasset industry. These proposals, currently in the form of a consultation, will see many (but not all) cryptoasset-related activities being brought within the regulatory perimeter for financial services in the U.K.
In a January 2023 opinion,1 the Southern District of New York Bankruptcy Court overseeing the bankruptcy case of Latin American airline Avianca and certain of its affiliates sanctioned over 150 of the airline’s Brazilian and Columbian creditors who had filed proofs of claim in the bankruptcy case finding t