To what extent do courts assist overseas appointees (through recognition) and in what circumstances?
Are there any limitations typically imposed in respect of recognition of an overseas appointee?
What kinds of overseas appointees have been recognised in the British Virgin Islands?
Do courts assist in making BVI-incorporated companies subject to insolvency procedures in other jurisdictions?
This Q&A on cross-border assistance is part of a series on restructuring and corporate recovery jurisdiction in the British Virgin Islands.(1)
To what extent do courts assist overseas appointees (through recognition) and in what circumstances?
Statutory recognition
The British Virgin Islands can provide assistance to overseas appointees from designated relevant foreign jurisdictions – namely, Australia, Canada, Finland, Hong Kong, Japan, Jersey, New Zealand, the United Kingdom and the United States.(2) The BVI courts will take into account:
- the just treatment of all persons claiming in the foreign proceedings;
- the protection of persons in the British Virgin Islands who may have claims in the foreign proceedings;
- the prevention of preferences and fraud;
- the need for ranking for foreign claimants to be in order with BVI claimants; and
- comity.
The scope of permissible orders is very wide:
- restrain proceedings;
- delivery of property of the company to a foreign representative;
- coordination of BVI insolvency with foreign insolvency; or
- authorisation of the foreign representative of any person who could be examined in BVI insolvency proceedings.
Common law recognition
The current BVI position is that common law assistance can be given to overseas appointees, but only to those from the relevant jurisdictions for the purposes of statutory recognition.
Are there any limitations typically imposed in respect of recognition of an overseas appointee?
Two limitations should be noted:
- The BVI courts cannot grant any assistance that adversely affects set-off rights or the rights of preferential or secured creditors without their consent.
- Under common law assistance, relief will only be granted if that is available to the overseas appointee in their home jurisdiction and available at common law in the British Virgin Islands.
What kinds of overseas appointees have been recognised in the British Virgin Islands?
A Hong Kong trustee in bankruptcy has been recognised. A US receiver was refused recognition on the basis that the receivership was intended to protect US investors and was not for the purpose of a "reorganisation, liquidation or bankruptcy", as required by section 273 of the Insolvency Act 2003.
Do courts assist in making BVI-incorporated companies subject to insolvency procedures in other jurisdictions?
No. Although Part XVIII of the Act contains provisions based on the UNCITRAL Model Law on cross-border insolvency, that part has not been brought into force.
The existence of a foreign insolvency process in respect of a BVI company does not prevent the BVI courts from appointing a BVI liquidator, and, as a matter of common law, the BVI proceedings will be treated as the primary proceedings.
For further information on this topic please contact Brian Lacy, Nicholas Brookes, Anthony Oakes or Ray Wearmouth at Ogier by telephone (+44 1481 721 672) or email ([email protected], [email protected], [email protected] or [email protected]). The Ogier website can be accessed at www.ogier.com.
Endnotes
(1) For the first article in the series, please see "Restructuring and corporate recovery jurisdiction guide for British Virgin Islands: domestic procedures".
(2) This list of relevant jurisdictions is currently being reviewed for expansion.