Introduction
Although the wishes of the majority of creditors (whether in number or by value) is an important factor in many decisions made in insolvency proceedings, the court retains discretion regarding whether a company should be placed into liquidation.
Introduction
The British Virgin Islands' reputation as the leading offshore jurisdiction is well earned and it is dedicated to maintaining its status as a creditor-friendly and commercially flexible jurisdiction. The developments of 2015 are the latest example of its evolution as it continues to meet the needs of the global financial community. The following are the key developments to BVI law that are most likely to interest lenders and borrowers.
Australia is making several significant reforms to its insolvency legislation – with more changes likely to come – to provide much-needed comfort for directors and to align legislation on ipso facto clauses in order to prevent contractual terminations simply as a result of the commencement of an insolvency proceeding. (See the Productivity Commission Report on Business Set-up, Transfer and Closure (available here)).
Introduction
Recently, the British Virgin Islands has seen a trend wherein debtors involved in winding-up proceedings have sought to identify what appear to be spurious disputes and then to rely on arbitration clauses in order to strike out or stay the winding-up proceedings. While this tactic could be regarded as capitalising on the wider global trend towards giving absolute primacy to arbitration agreements, it is often deployed to buy time for debtors and frustrate creditors that are legitimately seeking to wind up insolvent companies.
We previously posted about a recent effort to address an issue left unresolved in Baker Botts v. ASARCO, 135 S. Ct.
Baker Botts L.L.P. has filed its application for retention as debtors’ counsel in In re New Gulf Resources, LLC, et al. (Case No. 15-12556, Bankr. D. Del.), and the application incudes a novel “Fee Premium.” Essentially, Baker Botts’ aggregate fees incurred in the case will be increased by 10% (subject to court approval) but … Baker Botts will waive the entire Fee Premium “if, and only if, Baker Botts does not incur material fees and expenses defending against any objection with respect to an interim or final fee application.”
More than three dozen US energy industry companies (E&Ps) filed for chapter 11 this year, with three more – New Gulf Resources LLC, Magnum Hunter Resources Corp., and Cubic Energy Inc. – filing just this third week of December. According to BloombergBriefs.com, even before these most recent filings. energy sector filings accounted for 26% of all chapter 11 filings in 2015, which is the largest share of filings for any sector. Just when the industry thought oil prices could not go any lower, they have.
Insolvency law in the Cayman Islands is principally regulated by the Companies Law (2013) and the Companies Winding Up Rules 2008, which are supplemented by a wide body of case law. The following guidance is a summary only.
Under Cayman law, a company may be wound up on the basis of insolvency if it cannot pay its debts as they fall due. A company is treated as unable to pay its debts if: