The Bermuda Commercial Court has provided guidance as to the considerations it will take into account when deciding the identity of the JPLs, further to our article on the Up Energy Group Ltd (the Company) restructuring and the circumstances in which Joint Provisional Liquidators (JPLs) will be appointed to monitor the proposed restructuring of a Be

Introduction

On September 20 2016 the BVI Commercial Court clarified whether the BVI Insolvency Act 2003 provides a basis for liquidators to draw fees on account before having formal approval from either a creditors' committee or the court. The court also specifically provided that newly appointed liquidators can draw payments of up to 80% on account of their reasonable remuneration and expenses on an interim basis without the need to obtain prior approval from the creditors' committee or the court.

This guide outlines the procedure for a voluntary liquidation of a solvent Cayman Islands exempted company and the duties of its liquidator. It also sets out the process for striking an exempted company off the Register of Companies in the Cayman Islands.

Voluntary liquidation

A Cayman Islands exempted company can be wound up voluntarily:

In UVW v XYZ (27 October 2016), the BVI Court gave an important judgment in relation to the obligations of a registered agent to provide third party disclosure to assist a foreign judgment creditor trace assets. This judgment is a broadening of the Norwich Pharmacal jurisdiction. It will enable a judgment creditor who has no evidence of misuse of a specific corporate structure but who can evidence a general pattern of wilfully evasive conduct by the judgment debtor, as opposed to a mere failure to pay, to obtain third party disclosure in support of asset tracing or execution.

Judges from 10 jurisdictions met in October 2016 in Singapore for the inaugural Judicial Insolvency Network Conference.

High on the agenda of the esteemed conference participants was the preparation of Draft Guidelines to provide practical assistance for Judges and insolvency practitioners alike in dealing with difficult issues which cross-border insolvencies and restructurings commonly face.

Since The Insolvency Act 2003 (the Act) was enacted, there has been some confusion as to whether it provided a basis for liquidators to draw fees on account before having formal approval from either a creditors' committee or the Court. On 20 September 2016, the BVI Commercial Court clarified the position and specifically provided that newly appointed liquidators could draw payments of up to 80% on account of their reasonable remuneration and expenses on an interim basis without the need to obtain prior approval from the creditors' committee or the Court.

JPLs play an unheralded but crucial mediating role in Bermuda

This is a short guide to solvent voluntary liquidations of companies incorporated in the British Virgin Islands. It is not intended as a substitute for full legal advice but more as an aide memoire to the procedures involved.

1. Why is the company being put into solvent voluntary liquidation/being "wound up"?

A BVI company generally has no limit on its duration. However, like all good things, a company may come to the end of its useful life. This may be because the assets it held have been transferred out or sold.

In a recent decision, the U.S. Bankruptcy Court for the District of Delaware refused to enforce a provision in the debtor’s LLC operating agreement requiring a unanimous vote of the debtor’s members to authorize the debtor to file for bankruptcy. In re Intervention Energy Holdings, LLC, et al., 2016 Bankr. LEXIS 2241 (Bankr. D. Del. June 3, 2016).