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.

A recent decision from the Commercial Court of the British Virgin Islands has clarified the position of a redeemed shareholder of a fund who has a claim for redemption proceeds which have become due and payable. In the matter ofWestern Union International Limited v Reserve International Liquidity Fund Ltd., the court considered the status of a redeemed shareholder both before and after the commencement of the liquidation of a fund and the operation of Section 197 of the Insolvency Act, 2003 (the “Act”). Section 197 states that:

The Court clarifies many debatable questions related to insolvency proceedings under the Bulgarian Commercial Act

Last week, one of the largest tour operators and package tour operators in the world shut down – Thomas Cook. On September 23, 2019, the UK Supreme Court appointed an Official Receiver, a figure similar to the insolvency receiver in Bulgaria, who takes over the “management” of dozens of Thomas Cook Group companies and appoints consulting firms AlixPartners and KPMG to support the process.

The provisions of Part IX of the BVI Business Companies Act, 2004 (as amended,1 the Companies Act) deal with corporate reconstructions, specifically:

1. mergers;
2. consolidations;
3. sales of assets;
4. forced redemptions of minority shareholders;
5. arrangements; and
6. provisions dealing with dissenting members.

A recent application to the British Virgin Islands courts has sought to blur the lines between directors’ general duties to act for the benefit of an insolvent company’s creditors, and the statutory clawback associated with unfair preferences entered into in the twilight period prior to a company going into liquidation.

In recognition of the new BVI Commercial Court, Harneys is publishing quarterly Commercial Court case notes which summarise some of the more important judgments delivered by the Court.

Appropriation

Under Bulgarian law, persons who manage and represent companies and cooperatives (“Officers”) have a duty to file for bankruptcy 30 days from the cessation of payments if the entity they manage and represent becomes insolvent. Apart from the personal liability to creditors for late filing, the aforementioned Officers could be held criminally liable. During the last few years, the practice of the lower courts regarding this criminal liability was inconsistent. Generally there were two interpretations of the law:

We saw important amendments to the Bulgarian Commerce Act (the “Act”) come to life at the very end of 2016, most notably regarding:

Notary certifications – currently in effect

On 2 January 2017, amendments to the Bulgarian Commerce Act (the "Act") entered into force in Bulgaria. Amongst the aims of the Act is to prevent falsification of documents by introducing new formal requirements for certain agreements and shareholders' resolutions.

STRICTER FORMAL REQUIREMENTS FOR AGREEMENTS