In Yeung Kwok Mung v The Attorney General and the Financial Services Commission, BVIHCM 2011/0002 and Dedyson Enterprises Limited v Registrar of Corporate Affairs, BVIHCM 2011/0008, the BVI High Court Commercial Division addressed the principles applying to restoration applications under section 43 of the BVI Business Companies Act (the “BC Act”). The key principles emerge from the decisions:

The recent decision in Pacific China Holdings Limited v Grand Pacific Holdings Limited, BVIHCV 2009/389 sets out the view of the BVI Commercial Court as to who, if anyone, should be responsible for the remuneration of liquidators where a liquidation order is set aside on appeal.

• In Irving H. Picard v Bernard L. Madoff Investment Securities LLC, BVIHCV 0140/2010, the trustee appointed in the liquidation of the business of Bernard L. Madoff Investment Securities LLC (“Picard” and “BLMIS”) sought, amongst other things, (i) recognition in the BVI as a foreign representative; (ii) an entitlement to apply to the BVI Court for orders in aid of the foreign proceeding; and (iii) an entitlement to require any person to deliver up to him any property of BLMIS.
• Bannister J.

With the future of the New York City Off Track Betting Corp. up in the air, the New York Senate returned to the Capitol Tuesday, Dec. 7, to find itself in the middle of a long-standing battle between tracks and OTB corporations in the state.

Officials at the NYCOTB, which is in Chapter 9 bankruptcy protection, vowed to shut down the stateowned betting giant at midnight Dec. 7 if the Senate does not pass a reorganization bill already approved last week by the Assembly.

Yesterday, the ECSC Court of Appeal set aside the winding up order made in the case of Westford Special Situations Fund Ltd. v. Barfield Nominees Limited and another, and dismissed the Joint Liquidators appointed over the fund.

Westford was put into liquidation earlier this year by shareholders whose application was based on their entitlement to unpaid redemption proceeds. At first instance the application was allowed and Joint Liquidators were appointed over the Fund on two grounds:-

Title II of the Act, designated "Orderly Liquidation Authority" – effective July 21, 2010 – establishes what is intended to be an orderly liquidation process for "financial companies" whose collapse or potential collapse are determined to constitute a risk to the financial system as a whole. Such systemically significant institutions would be liquidated under these new procedures, rather than being treated under existing bankruptcy laws. (The intent of Act is that most-failing financial companies will continue to be administered under existing bankruptcy laws.)

With a growing number of projects facing financial difficulty, the importance of maintaining leverage for securing payment is greater than ever. The project itself remains a prime security target for any contractor, subcontractor or supplier for assuring appropriate attention is given to their claims and that payment will be forthcoming in a timely and unencumbered manner. Some very recent developments in the lien realm emphasize the ongoing attention that is being given to lien statutes and the opportunity they provide for maximizing those considerations of security and leverage.

QUESTIONS AND ANSWERS  

Q1. Is it possible to appoint a receiver over assets which have been charged by a British Virgin Islands (‘BVI’) company (a ‘Company’) under a security document?

A1. Yes, provided that the security interest which has been granted by the Company to the beneficiary (the ‘mortgagee’) over the Company’s assets allows the mortgagee to appoint a receiver. Appointing a receiver is probably the most common way of enforcing security interests granted by Companies.  

There continues to be numerous issues surrounding the “creditor/investor” debate in fund’s litigation. There have been a number of cases of particular note. First of all Citco Global v Y2K Finance where a winding up petition was brought on two basis. First of all, alleged improper redemption payments made by the fund prior to the suspension of redemptions.

Western Union v Reserve International The BVI Commercial Court, which was established last May, has handed down an important decision on the status of a redeemed shareholder and the application of Section 197 of the Insolvency Act 2003 to the investor’s status. In summary, the redeemed shareholder was viewed as an unsecured creditor and, as such, able to petition for the liquidation of the company in which they were previously a shareholder and to rank alongside other, third party, unsecured creditors.