Offshore Litigation

Blog

Offshore Litigation

Contributors

Jonathan Addo
Jonathan Addo
  • Jonathan Addo

  • Partner
  • British Virgin Islands
Jeremy Child
Jeremy Child
  • Jeremy Child

  • Partner
  • London
Stuart Cullen
Stuart Cullen
  • Stuart Cullen

  • Partner
  • British Virgin Islands
Julie Engwirda
Julie Engwirda
  • Julie Engwirda

  • Partner
  • Hong Kong
Peter Ferrer
Peter Ferrer
  • Peter Ferrer

  • Partner
  • British Virgin Islands
Claire Goldstein
Claire Goldstein
  • Claire Goldstein

  • Partner
  • British Virgin Islands
Hazel-Ann Hannaway
Hazel-Ann Hannaway
  • Hazel-Ann Hannaway

  • Partner
  • British Virgin Islands
Nick Hoffman
Nick Hoffman
  • Nick Hoffman

  • Partner
  • Cayman Islands
Andrew Johnstone
Andrew Johnstone
  • Andrew Johnstone

  • Partner
  • Hong Kong
Paula Kay
Paula Kay
  • Paula Kay

  • Partner
  • Hong Kong
Phillip Kite
Phillip Kite
  • Phillip Kite

  • Partner
  • London
Vicky Lord
Vicky Lord
  • Vicky Lord

  • Partner
  • Shanghai
Paul Madden
Paul Madden
  • Paul Madden

  • Partner
  • Cayman Islands
Henry Mander
Henry Mander
  • Henry Mander

  • Partner
  • Cayman Islands
Ian Mann
Ian Mann
  • Ian Mann

  • Partner
  • Hong Kong
William Peake
William Peake
  • William Peake

  • Partner
  • London
Lorinda Peasland
Lorinda Peasland
  • Lorinda Peasland

  • Consultant
  • Hong Kong
Chai Ridgers
Chai Ridgers
  • Chai Ridgers

  • Partner
  • Hong Kong
Nicola Roberts
Nicola Roberts
  • Nicola Roberts

  • Partner
  • Hong Kong
  • Singapore
Paul Smith
Paul Smith
  • Paul Smith

  • Partner
  • Cayman Islands
Andrew Thorp
Andrew Thorp
  • Andrew Thorp

  • Partner
  • British Virgin Islands
Jessica Williams
Jessica Williams
  • Jessica Williams

  • Partner
  • Cayman Islands
Jayson Wood
Jayson Wood
  • Jayson Wood

  • Partner
  • Cayman Islands

Protection from predatory creditor actions in the BVI: the imposition of a “moratorium” in all but name

As reported in our Century Sunshine blog, Justice Jack, in the BVI Commercial Court recently appointed joint provisional liquidators over four BVI companies on a “light touch” basis following the precedent set down in Constellation.

The terms of the joint provisional liquidators’ appointment mean that they will supervise the ongoing management of the companies by the existing boards of directors and ensure that the companies work towards a “holistic” restructuring of the wider Group’s debts. However, the appointment of the provisional liquidators would not have automatically imposed a moratorium on creditor claims or actions because the companies are not considered to be in (full) liquidation. This meant that, without some added layer of protection, the companies would still be prone to predatory creditor actions and claims, which could potentially undermine the wider Group restructuring.

The companies were able to circumvent this concern by having the Court impose a “contingent moratorium” within the appointment order.

Section 174 of the BVI Insolvency Act provides that where an application for the appointment of a liquidator has been filed but not yet determined, a person who would have the power to apply for the appointment of a provisional liquidator (which includes the company itself) may apply to stay any action or proceeding that is pending against the company in the BVI courts. In this case the companies sought a term in the order that would automatically impose a stay, pursuant to s.174, in the event that any suit action or other proceeding is commenced against the companies. This term, which was specifically considered and approved by the Court, means that the companies will not be required to apply to the court for a stay each and every time a suit or action is commenced against the company and should ensure that any associated costs with such applications are avoided.

The use of s.174 in this way is believed to be novel and has the effect of putting in place a moratorium in circumstances where provisional, but not full, liquidators have been appointed and where no automatic protection would automatically arise.

Harneys acted for the Century Sunshine Group in appointing the provisional liquidators. Bermuda law advice was provided through Zuill & Co., an independent Bermudian law firm in exclusive association with Harneys.

Protection from predatory creditor actions in the BVI: the imposition of a “moratorium” in all but name

Leave A Comment