A recent BVI Court of Appeal decision in KMG International NV v DP Holding SA serves as a useful reminder to keep an eye on the clock when seeking the appointment of liquidators to a company in the British Virgin Islands.
KMG had filed an originating application seeking the appointment of liquidators to DPH (a company incorporated in Switzerland) and had successfully applied for:
In the latest judgment regarding the DPH liquidation,(1) the BVI Court of Appeal upheld the appointment of BVI provisional liquidators in respect of a Swiss company and clarified that evidence of dissipation of assets (in the Mareva sense) may not be a pre-condition to the appointment of provisional liquidators.
In the case of Delco Participation BV v Green Elite Limited [2018] the Court of Appeal considered the test for appointing liquidators to a company following an alleged loss of substratum.
Grant Thornton were appointed as receivers over a BVI company under Section 43 of the Arbitration Act 2013 to preserve the value of the company pending the determination of foreign arbitration proceedings. The defendant in the arbitration owned the shares of the BVI Company.
In separate but related proceedings, the BVI courts have permitted an applicant to inspect documentation relating to the liquidation of certain BVI companies.
In Robert Tchenguiz v Rawlinson & Hunter Trustee SA (the TFT Trust claim) Tchenguiz sought delivery of all proof of debt and claim documentation submitted by the defendant trustees to the joint liquidators in the liquidation of the companies.
`Forum shopping' is the practice of choosing the most favourable jurisdiction in which a claim could be heard. It is often used as a pejorative, a form of jurisdictional gamesmanship, but, in principle, there is nothing wrong in seeking to have the case heard in the forum which is most favourable to the client. It can however lead to some fierce jurisdictional battles particularly in insolvency where the choice can be stark between debtor and creditor friendly procedures.
On September 20 2016 the BVI Commercial Court clarified whether the BVI Insolvency Act 2003 provides a basis for liquidators to draw fees on account before having formal approval from either a creditors' committee or the court. The court also specifically provided that newly appointed liquidators can draw payments of up to 80% on account of their reasonable remuneration and expenses on an interim basis without the need to obtain prior approval from the creditors' committee or the court.
In a recent decision in the case of TIPP Investments PCC v. Chagala Group Ltd. et al (BVIHCM 102/2016), Mr Justice Davis-White clarified the issue of the standing of beneficial shareholders that we highlighted in our previous article.
In an era of increasing complexity in regulation globally, the BVI has carefully built a simple and clear regulatory framework that minimises the legal risk for lenders and financial markets participants dealing with BVI companies.
Legal
The BVI’s regulatory framework is structured to make the legal risk of lending or selling financial assets to a BVI entity lower than almost any other jurisdiction.