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:

There continues to be numerous issues surrounding the “creditor/investor” debate in fund’s litigation. There have been a number of cases of particular note. First of all Citco Global v Y2K Finance where a winding up petition was brought on two basis. First of all, alleged improper redemption payments made by the fund prior to the suspension of redemptions.

The British Virgin Island’s Commercial Court has recently delivered a decision in Western Union International Limited v Reserve International Liquidity Fund Ltd which addresses the issue of when during the redemption process a redeeming investor becomes a creditor of the fund and is therefore entitled to apply for the appointment of a liquidator.

The British Virgin Islands Commercial Court has recently delivered a decision in Western Union International Limited v Reserve International Liquidity Fund Ltd which addresses the issue of when during the redemption process a redeeming investor becomes a creditor of the fund and is therefore entitled to apply for the appointment of a liquidator.

Update on Liquidator remuneration post-Sakr1

Key points summary

Following the recent high-profile appeal decision2, the Supreme Court of New South Wales has now finalised the saga that was the review and approval of the remuneration of the Liquidator of Sakr Nominees.

From that decision emerge several key points for insolvency professionals when considering their remuneration:

Introduction

Governments raise taxes to ensure the country can fund essential public services. Taxes are used to build and maintain public infrastructure such as roads and transport services and to provide education, a world class health care system as well as welfare assistance.

Paying taxes is part of our civic duty. Sometimes, however, taxpayers (whether individuals or companies) do not or cannot meet their obligations and it is necessary for steps to be taken by and on behalf of the Australian Taxation Office (ATO) to recover those taxes.

MK Builders Pty Ltd v 36 Warrigal Road Pty Ltd & Ors [2014] VSC 149

The decision is significant because it confirms that a payment of a dividend to a creditor does not necessarily extinguish the company’s claim for the balance in fact owing to it.

In many bankruptcies the trustee is without funds to undertake litigation for the benefit of the bankrupt estate. In some cases a creditor is willing to indemnify the trustee in respect of the costs of such litigation where there are strong prospects of a successful conclusion with sufficient funds realised to distribute a dividend to creditors.

When a company is placed into liquidation, the company’s available funds are paid to general unsecured creditors on a pro rata basis by way of a dividend payment.  However, certain classes of creditors are given priority in the payment of dividends, including employees who are owed wages and other employment entitlements by the company.

What is the position if a person advances money to a company, after it has been placed into external administration, to allow the company to pay wages or other entitlements to employees?

Last Friday, financial services group Dexia SA announced that it had reached an agreement with the European Commission relating to its restructuring plan. Dexia had previously received approximately €6.4 billion in bailout money from Belgium, France and Luxembourg. Pursuant to the negotiated restructuring plan, Dexia will: