A 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 British Virgin Islands.

KMG had filed an originating application seeking the appointment of liquidators to DPH (a company incorporated in Switzerland) and had successfully applied for:

  • leave to serve out of the jurisdiction; and
  • the immediate appointment of provisional liquidators.

The leave order was subsequently set aside, but the provisional liquidator order stood in the meantime. KMG filed a notice of appeal on June 8 2017 and DPH filed a counter-notice thereafter. Meanwhile, time was ticking on the originating application, which had to be determined within six months of filing (subject to an extension of time by the court), failing which the application would be deemed to have been dismissed pursuant to Section 168 of the BVI Insolvency Act. KMG secured an initial extension of three months but failed to apply for a further extension, and DPH subsequently argued that the originating application was deemed dismissed on July 11 2017.

Before the Court of Appeal, KMG argued that the continuation of the provisional liquidator 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.

This decision makes clear that any extension must be expressly granted and legal practitioners must therefore 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.

For further information on this topic please contact Joanne Verbiesen or Fleur O'Driscoll at Harneys' Hong Kong office by telephone (+852 5806 7800) or email ([email protected] or [email protected]). Alternatively, contact Peter Ferrer at Harneys' Tortola office by telephone (+1 284 494 2233) or email ([email protected]). The Harneys website can be accessed at www.harneys.com.

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