It has been an interesting year-to-date in the Asia Pacific1 Region, particularly in the Mainland2 and Hong Kong3 as the Region has pivoted from COVID-zero to reopening its borders to the world. Given the number of larger scale Mainland property-related restructurings that were promulgated during the pandemic it is fair to say that at least amongst some in the profession, there were great (restructuring) expectations of 2023. This next wave of restructurings has not yet eventuated. Why?

Asia restructuring considerations & observations

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.

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 Eastern Caribbean Supreme Court of Appeal has dismissed an application to stay the appointment of liquidators pending the outcome of an appeal against a landmark first instance decision by the BVI Commercial Court, in which it was determined that ultimate beneficial interest holders of notes are 'creditors' under the BVI Insolvency Act and so have standing to issue liquidation applications against defaulting note issuers.

Background

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.

In a landmark decision, the BVI Commercial Court has confirmed that ultimate beneficial interest holders of notes are 'creditors' under the BVI Insolvency Act and so have standing to issue liquidation applications against defaulting note issuers.

Mourant Ozannes, working alongside Ashurst (Hong Kong) and Counsel, Peter Burgess of South Square, has secured a landmark decision in the matter of Cithara Global Multi-Strategy SPC (Cithara) v Haimen Zhongnan Investment Development (International) Co Ltd (the Company).

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:

This article is the second in a series of three articles which examine the key features of a securitisation vehicle and the advantages of utilising an Orphan SPV in the Cayman Islands for a securitisation transaction.

BVI UPDATES 1. Changes to FSC fees The Financial Services (Fees) (Amendment) Regulations, 2023 came into force on 1 April 2023, with the exception of fees relating to the virtual asset services provider regime which came into force on 1 February 2023.

The Cayman Islands is the preeminent offshore jurisdiction for corporate, fund and finance vehicles. It is also a creditor friendly jurisdiction, where properly constituted security has statutory protection from the reach of liquidators. We explore some of the options available to lenders and companies when navigating troubled waters.

1 Introduction