Leveraged loans continue to be a topic of interest in the current environment, particularly when they are pooled and securitized as collateralized loan obligations. A recent decision sheds light on whether and when leveraged loans and similar instruments may be classified as securities and, therefore, be subject to securities laws.
As the COVID-19 pandemic continues to disrupt businesses and markets, and companies begin to look to bankruptcy courts for relief from the resulting liquidity and operational distress, the issue of creditor and shareholder “blocking rights” seems likely to become an important topic as parties attempt to protect their investments.
A company incorporated in the British Virgin Islands (the “BVI”) can be placed into insolvent liquidation either by: a shareholders’ qualifying resolution; or a court order, following an application to the court and a hearing.
The effect of an insolvent liquidation is to put the affairs of the company in the hands of an independent insolvency practitioner who is required to take possession of, protect and realise the company’s assets for the benefit of the company’s creditors.
An application to court can be made by:
The office of the Registrar of Corporate Affairs (the “Registrar”) in the British Virgin Islands (the “BVI”) has responsibility for the incorporation, striking-off and restoration of struck off companies to the register of companies (the “Register”).
Administrative strike off of a British Virgin Islands company
The Registrar may strike a company off the Register for a number of different reasons, including:
On May 1, 2020, in connection with the bankruptcy sale of Dean Foods Company (“Dean Foods”), the Department of Justice Antitrust Division required divestiture of certain Dean Foods assets by Dairy Farmers of America Inc. (“DFA”). DFA and Prairie Farms Dairy Inc. (“Prairie Farms”) were acquiring fluid milk processing plants from Dean Foods.
In the current economic climate, there is a pressing need for cross-jurisdictional co-operation when it comes to the Courts’ involvement in restructuring and insolvency proceedings. An increasing number of Hong Kong companies are finding themselves in need of urgent assistance with restructuring and insolvency processes; this requires international co-operation where, as is often the case, such companies are incorporated in offshore jurisdictions.
Carey Olsen presents this unofficial consolidation of the BVI Insolvency Act 2003 (the “Act”) and the Insolvency Rules 2005 (the “Rules”), which we hope will be of interest as a reference guide for anyone involved in cross border restructuring and insolvency.
As Guernsey companies, like their international counterparts, fight to manage the COVID-19 crisis with differing levels of state support, much has been reported about potential changes to the insolvency framework available to bolster survival measures.
Many companies are facing new and challenging circumstances given the fast-moving COVID-19 situation. It is likely that during the coming weeks you and your fellow board members will be called upon to make difficult decisions. This is a critical time during which it is imperative to ensure you are focused on the key issues and equipped to act prudently and in accordance with your duties.
What are your duties?
With courts and government agencies around the world enacting emergency measures in response to the Covid-19 pandemic – ranging from complete shutdowns to delays and limitations – advancing the ball in dispute resolution is more challenging than ever. Because fraud investigations and complex asset recovery matters are typically managed by litigation counsel and often follow litigated claims, clients have a tendency to see the effort through a litigation lens.