In the recent decision of Greig William Alexander Mitchell & Ors v Sheikh Mohamed Bin Issa Al Jaber & Ors[2023] EWHC 364 (Ch), the English High Court was required to consider the question of what duties (if any) a director owes to a BVI company post-liquidation; in particular in light of section 175(1)(b) of the BVI Insolvency Act 2003 (hereinafter, the Act) which expressly provides that upon liquidation “the directors and other officers of the company remain in office, but they cease to have any powers, functions or duties
The Quincecare duty has become a popular tool for companies (or their liquidators) to claim against banks for funds misappropriated on wrongful payment instructions. It requires a bank to refrain from executing a payment order if and for so long as it was put on inquiry by having reasonable grounds for believing that the order was an attempt to misappropriate funds.
Executive Summary:
Inflationary pressures and increasing interest rates are expected to continue to have a negative impact on the global economy during 2023. In this article we consider restructuring options under BVI law available to companies in or approaching financial difficulties, when a BVI company will be considered to be insolvent, the duties of directors of financially distressed or insolvent BVI companies and practical steps and considerations for directors where a BVI company may be approaching insolvency.
Restructuring Options and Creditor Arrangements
On 11 November 2022, Mr Justice Kawaley ordered the first appointment of restructuring officers inRe Oriente Group Limited (FSD 231 of 2022) under the new Cayman Islands restructuring regime, with reserved written reasons to follow. On 15 November 2022, we provided a brief update on some of the key takeaways from the hearing, which can be found here.
As the Grand Court of the Cayman Islands reopens for 2023, it is a good time to reflect on what transpired in 2022. A review of the filings made in the Grand Court throughout 2022 shows a very significant number of cases concerning large-scale cross-border insolvency and restructuring proceedings, as well as various complex commercial disputes.
Statistics from the Grand Court
In October 2022, the Privy Council delivered its judgment in the Z Trust case of Equity Trust (Jersey) Ltd (Respondent) v Halabi (in his capacity as Executor of the Estate of the late Mdam Intisar Nouri) (Jersey)which was consolidated with ITG Ltd and others (Respondents) v Fort Trustees Ltd and another (Appellants) (Guernsey).The Privy Council considered the nature and scope of the right of a former trustee to recover from or be indemnified out of assets of an insolvent trust in respect of liabilities and other expenditures proper
In the past six months, four major players in the crypto space have filed for chapter 11 bankruptcy protection: Celsius Network, Voyager Digital, FTX, and BlockFi, and more may be forthcoming. Together, the debtors in these four bankruptcy cases are beholden to hundreds of thousands of creditors. The bulk of the claims in these cases are customer claims related to cryptocurrency held on the debtors’ respective platforms. These customer claimants deposited or “stored” fiat currency and cryptocurrencies on the debtors’ platforms.
On November 29, U.S. Senator Ron Wyden (D-OR), Chairman of the Senate Finance Committee, sent requests for information to the CEOs of six of the largest crypto exchanges. The requests seek information about the safeguards each exchange has put in place to protect customers’ assets in the event they file for bankruptcy or otherwise experience financial distress.
On 11 November 2022, Mr Justice Kawaley ordered the first appointment of restructuring officers inRe Oriente Group Limited (FSD 231 of 2022) under the new Cayman Islands restructuring regime, with reserved written reasons to follow. We provide a brief update on some of the key takeaways from the hearing below.