This briefing note provides an overview of some of the commercial reasons for and the technical legal requirements of a company wishing to acquire its own shares (also referred to as “share buy-backs”).

Key points

• Directors have been temporarily relieved of their duty to prevent insolvent trading during the COVID-19 pandemic.
• That relief is scheduled to expire on 31 December 2020.
• Many commentators believe that directors can only avail themselves of the temporary relief if they appoint a liquidator or administrator before the moratorium expires.
• Directors of companies at risk of insolvency should seek legal advice regarding their potential liability.

The Government’s response to the pandemic

Statutory demands are often conflated with other debt recovery mechanisms available to creditors. Whilst a statutory demand may, in certain circumstances, be a useful tool in the debt recovery kit, its primary function is to establish whether a company can pay its debts as they fall due i.e. whether it satisfies the “cash flow test”.

In Guernsey, a company must pass both the cash flow and balance sheet solvency tests to meet the definition of solvency.

Australia’s ageing population has driven innovation in delivering housing solutions for retirees and elderly alike. As a nation of sports fanatics who also love nature and green open spaces, it is no surprise that there has been a steadily increasing trend to co-locate retirement living with recreational facilities such as golf courses, bowls clubs and other recreational clubs.

HopgoodGanim has been fortunate enough to have acted for a number of retirement village operators (scheme operators) and clubs with respect to co-location projects in Queensland.

Today 'soft touch' provisional liquidation is one of the most commonly deployed tools for facilitating a restructuring of offshore incorporated companies listed in Hong Kong and Singapore. However, when soft touch provisional liquidation was first developed by the Bermuda Court for this purpose, it was regarded as a tool of last resort.

The Bankruptcy (Netting, Contractual Subordination and Non-Petition Provisions) (Jersey) Law 2005 (the “Netting Law”) is a short piece of legislation of particular significance to financing transactions involving Jersey counterparties.

The relationship between arbitration clauses and winding up proceedings is a contentious issue in many jurisdictions and the debate shows no sign of abating. In the BVI, a recent case has further clarified the effect of an arbitration agreement on creditor's winding up proceedings pursued on the basis of a company's insolvency.

Statutory demands in the British Virgin Islands have long been a useful option for creditors of defaulting companies. Properly utilised, they either secure payment of the outstanding debt or provide the creditor with the benefit of a statutory presumption of insolvency to assist in their application to appoint a liquidator over the company.

Corporate ventures are usually founded with the very best intentions, but as matters unfold disputes between investors are all too common.

The legal steps to resolve such disputes and assert control over a company can be complex and arduous.

However, there are good reasons for this due process, and it cannot be circumvented.

Stephen John Hunt v Transworld Payment Solutions U.K. Limited (in liquidation) [2020] SC (Bda) 14 Com The Bermuda Supreme Court has clarified the rules for granting common law recognition and assistance to foreign insolvency office holders following the landmark competing Privy Council decisions of Singularis Holdings Ltd v Price Waterhouse Coopers [2014] UKPC 36 and Cambridge Gas Transportation Corporation v Official Committee of Unsecured Creditors (of Navigator Holding PLC and others) [2006] UKPC 26.