Although the wishes of the majority of creditors (whether in number or by value) is an important factor in many decisions made in insolvency proceedings, the court retains discretion regarding whether a company should be placed into liquidation.

This can be exercised even when a vast majority of unsecured creditors oppose the appointment of liquidators. In Krios Holdings Pte Limited v Shefford Investments Holding Limited (BVIHC (Com) 0131/2015), the BVI High Court recently exercised its discretion in refusing to dismiss or adjourn a winding-up petition. In his judgment, Justice Bannister confirmed that the exercise of the court's discretion whether to make, dismiss or adjourn an order appointing liquidators does not necessarily depend on the wishes of the majority of creditors – even when a vast majority of unsecured creditors both in number and by value oppose the appointment of liquidators.


Respondent debtor Shefford Investments Holding Limited was a BVI holding company with no underlying business, its sole assets being shares in a Singapore joint venture company, the major asset of which was a petrochemical processing plant.

Shefford had guaranteed payment and performance by its 100% parent company under a put and call option agreement between its parent company and petitioning creditor Krios Holdings Pte Ltd. The parent company failed to perform its obligations under the put option and owed the petitioning creditor US$40 million. When the parent company failed to make payment of the first tranche of US$10 million as it fell due, the petitioning creditor served a demand under the guarantee on Shefford. No payment was forthcoming. A statutory demand was subsequently served on Shefford, requiring payment of the debt within 21 days. No payment was forthcoming and no application to set aside the statutory demand was made. The petitioning creditor subsequently made an application for the appointment of liquidators.

In the week before the first hearing date, notices of opposition were served by Shefford and six other companies, including its parent company, claiming to be unsecured creditors in a total sum of approximately US$185 million. Shefford proposed a reorganisation in Singapore instead of the appointment of liquidators in the British Virgin Islands and – shortly after service of both the statutory demand and the application to appoint liquidators – Shefford applied to the Singapore High Court and obtained a moratorium to facilitate reorganisation. From the papers filed in the case it appeared that although Shefford was proposing a debt-for-equity swap in Singapore, there was a real potential that if the Singapore reorganisation was to go ahead, the remaining unsecured creditors might find themselves bound to accept dividends of only US¢0.5 in the dollar.

Re Demaglass Holdings Ltd

In determining whether to exercise its discretion to adjourn the application and allow for the restructuring to proceed in Singapore as requested in the majority creditors' notices of opposition, Bannister had express regard to Re Demaglass Holding Ltd, [2001] 2 BCLC 633. In that case, the English High Court recognised that "the exercise of the court's discretion will not normally be dependent on mathematical niceties" and "the fact that the majority of creditors in value support the making of a winding-up order is not necessarily decisive on the issue in every case".

Bannister stated that the exercise of the court's discretion cannot be decided simply on the basis of the number of creditors opposed to the making of the order and the quantum of the debt they are owed, and that it is not merely "a head counting exercise".

In refusing an adjournment and making an immediate order for the appointment of liquidators, Bannister also took into account the fact that the opposition from the majority creditors appeared to be part of an "orchestrated effort" which made Bannister question (without deciding) whether all of the creditors were legitimate.


The judgment provides clear BVI authority that even where a debtor company and the vast majority of creditors – even those representing over 90% by value of the company's debts – are opposed to a winding-up order, it will not prevent the court from exercising its discretion to appoint a liquidator for a clearly insolvent company. The robust decision is consistent with the BVI High Court's recent stance regarding insolvent companies relying on arbitral clauses to avoid insolvency.

For further information on this topic please contact Andrew Thorp or Stuart Cullen at Harney Westwood & Riegels by telephone (+1 284 494 2233) or email ( or The Harney Westwood & Riegels website can be accessed at

This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.