The new law of 19 March 2012 amending the Belgian Companies Code on the liquidation procedure which entered into force on 17 May 2012 (the “Law”) has put an end to the legal uncertainty and the controversial practice that arose from the law of 2 June 2006 regarding the realisation of the dissolution and liquidation of a company in one single act.

This new Law has to be read alongside the law of 22 April 2012 amending the Judicial Code on the liquidation procedure of companies (also entered into force on 17 May 2012).

On 9 February 2009, the Act of 31 January 2009 on the continuity of companies (Loi relative à la continuité des entreprises/Wet betreffende de continuïteit van de ondernemingen, the "Act") was published in the Belgian State Gazette.

The Act – which actually consists of two separate acts for technical reasons - will replace the unsuccessful Act of 17 July 1997 on composition with creditors.

Tax treatment in the hands of the creditor

The waiver of debt results in the accounting ‘loss’ of a receivable. Such loss, however, is not automatically tax deductible in the hands of the creditor.

The deductibility of such loss may be prohibited, either because it is deemed not to be incurred to retain or increase taxable income (‘general deduction criterion’), or because it is deemed to be an ‘abnormal or benevolent advantage’ granted to the debtor (‘anti-abuse rule’).

Although in some jurisdictions arbitration is a long-established form of alternative dispute resolution, this mechanism has only recently been regulated in Brazil. The Brazilian Commercial Code, enacted in 1850, already included a few sparse provisions regarding commercial arbitration, but there were no references to specific rules. It was not until 1996 that Brazil passed its first specific arbitration statute, Law No. 9,307/96 (Arbitration Law).

International guidelines on cross-border insolvency matters have recently been adopted by the BVI courts. The Judicial Insolvency Network guidelines – drafted in 2016 by ten insolvency judges from international jurisdictions, including a BVI Commercial Court Judge – aim to create co-operation and communication between courts on cross-jurisdiction proceedings, and to minimise the time and expense involved in litigation.

The Facts

The case concerned an application made by the Liquidators of a BVI incorporated company, Peak Hotels and Resorts Limited ("Peak"). The application was intended to determine the effectiveness of a charge granted by Peak to Candey Limited, Peak's former solicitor.

Peak was the holding company of a joint venture vehicle that became the subject of lengthy international litigation proceedings following the breakdown of relations between the joint venture partners and shareholders. Candey acted for peak in the litigation.

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.

This recent decision on a jurisdictional challenge has provided greater clarity and potentially created a tortious cause of action where a debtor dissipates assets prior to judgment and subsequent freezing order.

Background

Introduction

Introduction

Recently, the British Virgin Islands has seen a trend wherein debtors involved in winding-up proceedings have sought to identify what appear to be spurious disputes and then to rely on arbitration clauses in order to strike out or stay the winding-up proceedings. While this tactic could be regarded as capitalising on the wider global trend towards giving absolute primacy to arbitration agreements, it is often deployed to buy time for debtors and frustrate creditors that are legitimately seeking to wind up insolvent companies.