british virgin islands cayman islands guernsey jersey cape town london www.careyolsen.com 1 bvi litigation & insolvency client update - SEPTEMBER 2015 Dispute Resolution & Litigation | Restructuring & Insolvency British Virgin Islands Welcome to our September BVI litigation and insolvency bulletin, co-authored by Ben Mays, Andrew Chissick and Jevaughn Rhymer. This edition of the bulletin contains reports on four recent cases: • Privy Council authority concerning a contested, Court-run auction of a property arising in the liquidation of a well-known luxury Caribbean resort.
A superior court in New Hampshire has entered two orders – one concerning Arrowood Surplus Lines Insurance Company, the other&
The Royal Court of Guernsey has issued a Practice Direction pertaining to the information required when applying for the appointment of an administrator or liquidator in Guernsey.
The Practice Direction
INTRODUCTION
Following the Texas Attorney General’s objection to the sale of RadioShack Corporation’s consumer data as an asset in its bankruptcy, 37 other state attorneys general and a large number of other consumer protection entities formally raised similar concerns. RadioShack, which filed for bankruptcy on February 5, 2015, revealed in a representative’s deposition on March 20, 2015 that it held personally identifiable consumer data of 117 million consumers, or 37% of the residential population of the United States.
Since its 1989 opinion in Folendore v. Small Business Admin., the Eleventh Circuit Court of Appeals has allowed debtors to completely strip off and void wholly unsecured junior liens in Chapter 7 bankruptcies under Section 506(d) of the Bankruptcy Code. Complete lien stripping forever prevents creditors from seeking relief against a debtor’s collateral if it is underwater, even if the property value later increases. Since Chapter 7 debtors are also discharged of personal liability, subordinate debt is, in such cases, rendered worthless.
That may soon change.
Introduction
Carey Olsen’s restructuring and insolvency team has succeeded in applying to the Royal Court for the restoration of K2 Insurance Limited (“K2”), a liquidated and dissolved company, enabling the company to subsequently recover a substantial asset. Advocate David Jones and Associate Harry Stirk acted for Ian Damarell of BDO Limited, the liquidator of K2.
The Facts
This article focuses on the judgments delivered in June and October 2014 by the Guernsey Court of Appeal in the long-running Tchenguiz litigation [Investec Trust (Guernsey) Limited and Another v Glenalla Properties Limited and Others]. The litigation concerned the liabilities of a trustee to creditors in circumstances where the creditor claims far outweighed the value of the trust fund.
A consultation process to update the insolvency laws and practices in Guernsey has been launched by a government department in the island with businesses, industry bodies, lawyers and insolvency practitioners being invited to respond to the process before 31 December 2014.
David Jones a restructuring and insolvency expert from Carey Olsen was invited to participate as part of the Commerce and Employment Department’s working party that reviewed the laws which raise a number of key areas for change.
In July of this year, the State Corporation Commission of the Commonwealth of Virginia issued an Order declaring Southern Title Insurance Company insolvent and ordering its liquidation.