In the recent case of Mitchell v Al Jaber [2024] EWCA Civ 423, the Court of Appeal confirmed that a shareholder and director may still be subject to a fiduciary duty when purporting to transfer company property, even after the company enters liquidation. The decision was made in relation to British Virgin Island (BVI) law, but on the basis of English case authorities.

Background

Liquidation is a legal process that ultimately dissolves the existence of a selected legal entity. During liquidation, the company empties itself of all its economic content, followed by the dissolution of its legal entity. The primary purpose is to sever the connection between the company and its shareholders once the company ceases to operate and exist.

The Israeli Companies Law outlines various paths for the liquidation of Israeli companies and also determines the process and schedule for each option.

In this guide, we explain what to do when you no longer need a company that has been incorporated or registered in the British Virgin Islands (Company). Assuming the Company is solvent, you have two options: (1) arrange for the Company to be voluntarily liquidated and dissolved (Liquidated); or (2) leave (or apply for) the Company to be administratively struck-off and dissolved (Administratively Dissolved). For the reasons set out below, we usually recommend a Company is Liquidated, rather than Administratively Dissolved.

In Foo Kian Beng v OP3 International Pte Ltd (in liquidation) [2024] SGCA 10 (OP3 International)¹ the Singapore Court of Appeal considered the trigger for when the director's duty to consider the interests of creditors is engaged (referred to in the judgment as the Creditor Duty).

The Court held that:

In the recent decision in Blockchain Group Company Limited (in liquidation) v. PKF Hong Kong Limited¹, Le Pichon DHCJ decided that despite an error resulting in a protective writ naming the defendant as a limited company and formerly a firm, the relevant provisions to amend a party’s name could not be used to essentially replace the limited company with the firm.

Introduction

Under sections 90-15 and 90–20 of Schedule 2 of the Insolvency Practice Schedule (Corporations) (Practice Schedule) of the Corporations Act 2001 (Cth) (the Act), a liquidator may apply to the court for directions and judicial advice in winding up.

Purpose of Judicial Advice

The purpose of judicial advice was to give the liquidator advice as to the proper course of action to take in the liquidation, as noted by Goldberg J in Re Ansett Australia Ltd and Korda [2002] FCA 90 (Ansett).

Track record of insolvency – implications for licensing

A recent decision of the Tribunal, affirming a licensing decision under the Home Building Act 1989 (HB Act) of the regulator to refuse an application to renew a qualified supervisor certificate, reveals the keen focus of the regulator on using its licensing powers to clean up the industry.

The applicant before the Tribunal was the director, secretary and controlling mind of a company licensed under the HB Act and was its nominated supervisor.

1. INTRODUCTION A liquidation preference right is a preferential right provided to financial investors, generally to secure their equity finance investments. Such a right (in its various forms) is generally provided irrespective of the stage of investment (be it a preliminary seed round of funding, or a growth stage funding round). What may differ is the manner of liquidation preference provided to the right holders.

The Hong Kong Courts exercise supervisory jurisdiction over liquidations in Hong Kong. Recently, the High Court reiterated its role to assist liquidators to effectively discharge their duties, in the best interest of the general body of creditors.