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 Grand Court of the Cayman Islands has issued its first judgment appointing Restructuring Officers under the new section 91B of the Cayman Islands Companies Act, which came into force on 31 August 2022.

Introduction

Two decisions handed down on the same day – one by the Eastern Caribbean Court of Appeal and the other by the Commercial Division of the High Court – illustrate the approach of British Virgin Islands Courts to applications to appoint liquidators in circumstances where the subject matter of a dispute as to the existence of a debt falls within the scope of an arbitration agreement.

Introduction

In a judgment issued on 15 December in the English High Court (Lehman Brothers International (Europe)(in administration) v CRC Credit Fund Limited & Ors [2009] EWHC 3228), and based on assumed facts presented to him, Mr Justice Briggs described the failure by LBIE to protect client monies from the impact of insolvency as "truly spectacular" and involving "shocking underperformance".

Last week, the Associated Press announced that the number of bankruptcy filings in federal courts this year have increased by more than one-third. Based on numbers from the Administrative Office of the U.S. Courts, the Associated Press reports that about 1.4 million bankruptcy cases were filed between October 1, 2008 and September 30, 2009. In comparison, 1 million cases were filed during this same period last year. While Chapters 7, 12 and 13 filings have all increased, of particular note, Chapter 11 filings increased by 68 percent.

In a judgment handed down last week, the Court of Appeal upheld the decision of Mr Justice Blackburne (previously reported here) that the English courts have no jurisdiction to sanction the proposed scheme of arrangement for Lehman Brothers International Europe (LBIE) insofar as it purports to extinguish rights of beneficiaries under trusts.

Ernst & Young ("E&Y") has settled the Akai Holdings ("Akai") case with Akai’s liquidator, Borrelli Walsh. In this case, E&Y was accused of negligence for failing to avert Akai’s collapse in 2004.

E&Y had been Akai’s auditor prior to the collapse, which remains Hong Kong’s biggest ever insolvency. The terms of the settlement are confidential.

On 24 September 2009, the South China Morning Post reported that new evidence had come to light which suggested that E&Y’s staff had tampered with or faked hundreds of documents relating to its audit of Akai.

The administrators of Lehman Brothers International (Europe) have been intending to propose a scheme of arrangement under the English Companies Act to enable them to distribute several billions of dollars of assets held on trust by the company in the face of difficulties in establishing who was entitled to the trust assets; in particular, they had not received responses from all potentially interested clients, could not rely on the accuracy of the company's records and had not received all the information requested from sub-custodians and other intermediaries.

In Josef Syska (Administrator of Elektrim SA (in bankruptcy) and Elektrim SA (in bankruptcy) v Vivendi Universal SA & Others [2009] EWCA Civ 677 the main question to be decided by the Court of Appeal was whether, when an arbitration is proceeding in one Member State of the European Union, in this case the UK, and one of the parties to the arbitration becomes insolvent in another Member State, in this case Poland, the consequences of that insolvency, in so far as they affect the arbitration, are to be determined by the law of the Member State where the insolvency procee

Two D&O insurers have asked the U.S. Bankruptcy Court for the District of Minnesota to lift an automatic stay in a bankruptcy proceeding pending against their insureds so that the insurers can pursue their coverage defenses as counterclaims against the insureds in a pending declaratory judgment action.In Re Petters Company, Inc., et al., Case No. 08-45257 (Bankr. D. Minn.).