Introduction
The British Virgin Islands' reputation as the leading offshore jurisdiction is well earned and it is dedicated to maintaining its status as a creditor-friendly and commercially flexible jurisdiction. The developments of 2015 are the latest example of its evolution as it continues to meet the needs of the global financial community. The following are the key developments to BVI law that are most likely to interest lenders and borrowers.
The High Court of Australia in CGU Insurance Ltd v Blakeley & Ors [2016] HCA 2 unanimously confirmed that a third party can join a defendant’s insurer to a proceeding and seek a declaration of rights under the insurance agreement, provided that third party has a ‘real interest’ in the performance of the agreement and that there is practical utility in the court providing that declaration.
Introduction
Recently, the British Virgin Islands has seen a trend wherein debtors involved in winding-up proceedings have sought to identify what appear to be spurious disputes and then to rely on arbitration clauses in order to strike out or stay the winding-up proceedings. While this tactic could be regarded as capitalising on the wider global trend towards giving absolute primacy to arbitration agreements, it is often deployed to buy time for debtors and frustrate creditors that are legitimately seeking to wind up insolvent companies.
Today, by a majority of 3-2, the High Court of Australia in Commissioner of Taxation v Australian Building Systems Pty Ltd (in liq) [2015] HCA 48 confirmed that s 254(1)(d) of the Income Tax Assessment Act 1936 (Cth) (ITAA 1936) does not impose an obligation on trustees (including administrators, receivers and liquidators) to retain sufficient moneys from the trust fund to pay tax unless a relevant assessment has been issued.
The Turnbull Government’s much-heralded ‘Innovation Statement’ was released yesterday. It contained wide-ranging statements on reforms aimed at fostering innovation across a number of sectors in the Australian economy.
One important reform area is in Australian corporate insolvency law.
Corporate insolvency law reform timetable
The Innovation Statement includes important content for the reform of Australia’s corporate insolvency laws. It is part of an ongoing reform exercise which has followed this timetable to date:
Insolvency law in the Cayman Islands is principally regulated by the Companies Law (2013) and the Companies Winding Up Rules 2008, which are supplemented by a wide body of case law. The following guidance is a summary only.
Under Cayman law, a company may be wound up on the basis of insolvency if it cannot pay its debts as they fall due. A company is treated as unable to pay its debts if:
Introduction
Insolvency law in the British Virgin Islands is almost entirely codified in the Insolvency Act 2003 and supplemented by the Insolvency Rule 2005. The Insolvency Act was modelled largely on the UK Insolvency Act 1986, but with a number of key differences. This update summarises its features.
Consider this situation: a dispute has arisen between two parties in relation to an agreement which is subject to an arbitration clause. Separately, a winding up application has been made against one of the parties to the arbitration in the jurisdiction in which it is incorporated. An arbitral award is obtained against the potentially insolvent company. That company has assets in Hong Kong, against which the creditor is now seeking to enforce their rights.
The unanimous decision by the Full Court of the Federal Court in Templeton v Australian and Securities Investments Commission [2015] FCAFC 137 confirms that the concept of proportionality is a well-recognised factor in considering the question of reasonable remuneration for an insolvency practitioner, and that, in assessing a remuneration claim, the Court can take into account the quality and complexity of the work as well as the value and nature of any property dealt with and the time reasonably spent.