The Court of Appeal of the Eastern Caribbean Supreme Court sitting in the British Virgin Islands today began hearing arguments in the greatly anticipated appeals involving claims brought by the liquidators of Fairfield Sentry Limited ("Fairfield").

Redemption of shares and consideration
Discounted valuation
Restoration
Finality of foreign judgments

Redemption of shares and consideration

Voicing concern about the Rural Utilities Service’s (RUS) oversight of federal loans for rural broadband network projects, six members of the House Energy and Commerce Committee wrote to RUS Administrator and former FCC Commissioner Jonathan Adelstein to request information on a $267 million loan granted by the RUS to Open Range Communications, a regional broadband service provider that filed for Chapter 11 bankruptcy protection last month. The RUS funds approved for Open Range during the administration of President George W.

FairPoint Communications’ 2008 purchase of New England landlines from Verizon Communications is the subject of a $2 billion fraudulent transfer lawsuit, filed late last week by a litigation trust formed by FairPoint creditors, who claim that the $2.3 billion acquisition forced FairPoint into bankruptcy just 18 months later. North Carolina-based FairPoint, which emerged from bankruptcy in January but continues to struggle financially, provides wireline telephony and Internet services to nearly two million customers in 18 states.

As we reported in a client mailshot earlier this week, the Eastern Caribbean Supreme Court has made important amendment to its rules. The amendments are immediately in force and deal with a number of areas including appeal procedure, costs capping and costs orders.

In an application to wind up a BVI company the BVI Court re-stated the rules on when a foreign judgment creates an issue estoppel. Following The Sennar [1985] 1 WLR 490 the Court found that there would be an estoppel where a foreign judgment is (1) of a court of competent jurisdiction; (2) is final and conclusive; and (3) on the merits.

In a decision of interest in a number of jurisdictions where these types of claims have been made, the BVI Commercial Court handed down judgment today in the claim brought by the liquidators of Fairfield Sentry Limited, a BVI fund which invested in Bernard Madoff’s investment vehicle.

On September 2, the Delaware Supreme Court affirmed a holding by the Court of Chancery that creditors of insolvent Delaware limited liability companies do not have standing to sue derivatively. This contrasts with Delaware corporations: the Delaware courts have recognized that when a corporation becomes insolvent, creditors become the residual risk-bearers and are permitted to sue derivatively on behalf of a corporation to the same extent as stockholders.

By virtue of his appointment, a liquidator steps into the shoes of the company and so the usual contractual, tortious and equitable remedies are actionable by the liquidator, acting in the name of the company.  Claims are most likely to be based on the following:

First published in The Lawyer on July 18, 2011

Western economies, many With recoveries stalling in investors and creditors are ­considering carefully which jurisdictions will govern their interests in the event of insolvency and what, if anything, can be done to influence the process.

Many investment funds and other vehicles, attracted by tax-neutrality and stability, are incorporated in jurisdictions such as the ­Cayman Islands and the British Virgin Islands, but with their managers, operations, assets and investors often dispersed globally.