Friday, 29th October 2010Commercial Court Issues New Guidelines

Guidelines Issued in Respect of the Appointment of a Foreign Insolvency Practitioner to Act as Joint Liquidator

In a note to legal practitioners in the British Virgin Islands, the Commercial Court has provided guidelines for applicants seeking appointment of a foreign insolvency practitioner to act as joint liquidator of a company with a BVI licensed insolvency practitioner. 

Section 483(b) of the Insolvency Act, 2003 (the "Act") requires such applicants to give prior written notice to the Financial Services Commission ("FSC"); however, the Court was recently informed that S483(b) notices have been frequently received by the FSC at a very late stage and sometimes only on the afternoon of the day preceding the hearing of the application to appoint liquidators.

Whilst neither the Insolvency Act, 2003 nor the Insolvency Rules, 2005 specify any time limit for the service of a foreign IP notice, section 484(1) of the Act gives the Commission the right to appear at the hearing and object to the proposed appointment. It must follow that it was the intention of the legislature that the Commission should be given a reasonable time in which to consider the proposed appointment, to conduct such investigations as it might think fit into the qualifications and character of the foreign IP and, if so advised, to prepare submissions objecting to his appointment.

In the absence of special circumstances, it is considered that reasonable notice is not less than five clear working days (i.e. a foreign IP notice for a hearing set down for Monday 27 should ordinarily be given not later than Friday 17 (or earlier when a public holiday intervenes)).

BVI insolvency practitioners frequently accept appointments on cross-border matters jointly with foreign insolvency practitioners, particularly in hedge fund liquidations or asset tracing matters involving multinational groups of companies, where the appointment of an insolvency practitioner local to key assets or business interests and with specific knowledge of language and business culture is desirable.  Equally, applicants often find considerable advantages in having a BVI liquidator and the powers available to him in the location and recovery of assets globally, irrespective of where the principal places of business are.

Baker Tilly (BVI) Limited insolvency practitioners John J Greenwood and Hadley J Chilton are currently engaged in matters with foreign practitioners in numerous jurisdictions such as Singapore, Hong Kong and Australia. 

Baker Tilly (BVI) Limited is an independent member of Baker Tilly International, the 8th largest network in the world by fee income and is represented by 145 firms in 110 countries. Its member firms are high quality, independent accountancy and business services firms, all of whom are committed to providing the best possible service to their clients, both in their own marketplace and across the world.