Section 561 of the Corporations Act 2001 (Cth) provides that accrued employee entitlements must be paid in priority to the holder of a circulating security interest in a winding up.

Until recently, it was unresolved whether the property subject to a circulating security interest should be determined as at the date the liquidation began, on a continuous basis, or at some other unidentified date.

It is unresolved whether a creditor can rely upon a section 553C set-off under the Corporations Act 2001 (Cth) to reduce an unfair preference claim. Until the controversy is resolved by a binding court decision, liquidators and creditors will continue to adopt opposing positions.

A company in liquidation served a creditor’s statutory demand for debt where there was a genuine dispute about the existence of the alleged debt. The statutory demand was set aside by the Court and the liquidators were ordered to personally pay costs on an indemnity basis.

What happened

In SJG Developments Pty Limited v NT Two Nominees Pty Limited (in liquidation) [2020] QSC 104:

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:

As directors consider how to meet their duties during the COVID-19 pandemic, the safe harbour provisions may provide some protection from insolvent trading liability.

Introduction

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.

The ramifications of COVID-19 are being felt by businesses, and not-for-profits and charities are no exception. Key changes and considerations for not-for-profits and charities are outlined in this article.

Introduction

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.