What categories of transaction can be avoided or set aside?
Who is responsible for seeking orders to set aside such transactions?
This Q&A on avoidance transactions is part of a series on restructuring and corporate recovery jurisdiction in the British Virgin Islands.(1)
What categories of transaction can be avoided or set aside?
Potentially voidable transactions comprise:
- unfair preferences;
- transactions at an undervalue;
- voidable floating charges; and
- extortionate credit transactions.
The transaction, unless it is an extortionate credit transaction, must be an insolvency transaction (ie, one entered into when the company is insolvent, or which causes the company to become insolvent).
The relevant vulnerability periods are:
- two years prior to the onset of insolvency(2) for a connected person;(3)
- six months prior to the onset of insolvency for any other person; and
- five years in the case of extortionate credit transactions.
Who is responsible for seeking orders to set aside such transactions?
The responsibility for seeking an order to set aside the aforementioned transactions lies with the appointed liquidator.
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 previous articles in the series, please see "Restructuring and corporate recovery jurisdiction guide for British Virgin Islands: domestic procedures" and "Restructuring and corporate recovery jurisdiction guide for British Virgin Islands: cross-border assistance".
(2) "Onset of insolvency" means the date the application to appoint a liquidator was issued or the date the members' resolution was passed.
(3) A "connected person" includes related companies as well as directors and members of said related companies.