The recent BVI Court of Appeal decision in KMG International NV v DP Holding SA serves as a useful reminder to keep an eye on the clock when seeking the appointment of liquidators to a company in the BVI.
KMG had filed an originating application seeking the appointment of liquidators to DPH (a company incorporated in Switzerland) (Originating Application) and had successfully applied for both leave to serve out of the jurisdiction (Leave Order) and the immediate appointment of provisional liquidators (PL Order). The Leave Order was subsequently set aside but the PL Order stood in the meantime. KMG filed a notice of appeal on 8 June 2017 with a counter-notice filed by DPH thereafter. Meanwhile, time was ticking on the Originating Application which had to be determined within six months of filing (subject to extension of time by the Court) failing which the application would be deemed to have been dismissed (section 168 of the BVI Insolvency Act). KMG secured a first extension of three months but failed to apply for a further extension and DPH subsequently argued that the Originating Application was deemed dismissed on 11 July 2017.
Before the Court of Appeal, KMG argued that the continuation of the PL Order extended, by implication, the life of the Originating Application. The Court of Appeal rejected this argument finding, in the clearest terms, that there could be no implied extensions of time under section 168.
The decision makes it very clear that any extension must be expressly granted and, therefore, legal practitioners must keep an eye on the clock to avoid a deemed dismissal under section 168. In most cases, originating applications will be determined within six months. The danger arises in hard-fought litigation such as this where the existence of pending appeals, the appointment of provisional liquidators or orders of indefinite length may lull parties into a false sense of security that the Court has already blessed the continuation of the originating application.