BVI Recognition And Assistance For Foreign Insolvency Office Holders

On 10 November 2014 the Privy Council handed down judgment in Singularis Holdings Limited v PricewaterhouseCoopers1, which was heard alongside PricewaterhouseCoopers v Saad Investments Company Limited2. Both appeals were from decisions of the Court of Appeal of Bermuda. The Singularis decision may affect the ability of foreign office holders to gain assistance from the BVI Courts, in particular with regard to obtaining orders compelling the production of documents and information.


Singularis was heard alongside Saadbecause both cases concerned companies that were being wound up in the Cayman Islands. Their liquidators were seeking orders against PwC in Bermuda for the provision of information and documentation relating to the Cayman companies that the auditors had in their possession, especially their working papers. The Singularis application came about after the Bermudan judge at first instance found that the liquidators' appointment under Cayman law should confer recognition in Bermuda under a common law power that enabled him to confer on the liquidators the same powers as they would have had if they had been appointed in Bermuda. This was overturned by the Court of Appeal because the Bermudan Court's power to order the production of documents by the auditors did not have any equivalent in Cayman, and granting the liquidators powers that went beyond what the Cayman Court could grant was not permissible as it would amount to "unjustifiable forum shopping" by the liquidators. The liquidators appealed to the Privy Council.

The Privy Council Board were unanimous in finding that the Bermuda Court should not have granted a form of relief to the liquidators that was not available in Cayman, and accordingly the Privy Council dismissed the appeal. However in their reasoning, the Board discussed at length whether the Bermuda Court had a common law power to assist a foreign liquidation by ordering the production of information. By a majority of three to two, the Board held that such a common law power did exist.

The Board all agreed that the "principle of modified universalism is part of the common law". Lord Sumption (with whom Lord Clarke agreed) summarised the principle as being "founded on the public interest in the ability of foreign courts exercising insolvency jurisdiction in the place of the company's incorporation to conduct an orderly winding up of its affairs on a world-wide basis...the basis of that public interest is not only comity, but a recognition that in a world of global businesses, it is in the interest of every country that companies with transnational assets and operations should be capable of being wound up in an orderly fashion...".

The majority of the Board held that there is a common law power to assist foreign insolvency practitioners by ordering the production of information (in oral or documentary form) by an entity within the personal jurisdiction of the Bermuda Court. As Lord Sumption put it, the "acknowledged right [of foreign office holders] to take possession of the company's world-wide assets is of little use without the ability to identify and locate them, if necessary with the assistance of the court". The Board did, however, set out limitations for the exercise of that power, namely:

It is only available to assist the officers of a foreign court of insolvency jurisdiction or equivalent public officers - it would therefore not be applicable to a private arrangement such as a voluntary winding up; It is a power of assistance that exists to enable courts to overcome the territorial limits of their own powers when a company's affairs are being wound up world-wide. An order for production of information should not be made where it would not be available in the foreign court; It is only available when necessary for the insolvency practitioner to perform their functions; The order must be consistent with the substantive law and public policy of the assisting court. In particular, the common law power is not to be used for obtaining material for use...

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