A Guide To Appointing Liquidators Over A BVI Company

• Published date: 04 July 2022
• Subject Matter: Corporate/Commercial Law, Insolvency/Bankruptcy/Re-structuring, Corporate and Company Law, Insolvency/Bankruptcy
• Law Firm: Collas Crill
• Author: David Harby and Nia Statham

This article by David Harby and Nia Statham provides a useful summary of the rules and procedures that are to be followed and is likely to be of interest to liquidators, creditors and debtors of insolvent BVI companies.

Generally speaking, appointing liquidators over a company in the British Virgin Islands can be achieved by either:

1. the company's members resolving to appoint a liquidator by way of a qualifying resolution (i.e. passed by 75% of the company's members at a properly constituted meeting or higher if required by the company's Memorandum &amp Articles);¹ or
2. the Court appointing the Official Receiver or an eligible insolvency practitioner as a liquidator of a BVI company or a foreign company pursuant to an application made under sections 162 or 163 of the Insolvency Act, 2003 (the "Act") respectively.

In this note, we provide a high level summary concerning applications to appoint liquidators to a BVI company made pursuant to section 162 of the Act.²

The Collas Crill perspective

There may be certain advantages to securing a Court appointed liquidator over a members appointed liquidator, not least because a Court appointed liquidator is likely to be harder to remove (as creditors may only replace a liquidator by making an application under section 187 of the Act) and immediately enjoys all the powers set out in Schedule 2 of the Act (including any other powers that the Court may confer to them).

Conversely, the powers of a members' appointed liquidator are generally limited to collecting in and preserving the company's assets and they are obliged to call a creditors' meeting within 14 days of their appointment, at which time the creditors are entitled to replace them.

For Court appointed liquidators, there is no obligation to call a creditors' meeting if the liquidator deems it unnecessary and the requirement only arises if 10% in value of the company's creditors give written notice insisting on a meeting.³

It's important to stress at the outset however that once an application to appoint a liquidator under the Act has been made, it cannot be withdrawn except with leave of the Court⁴ and subject to the conditions specified in the Insolvency Rules, 2005 (the "Rules"). For that reason, applicants should be fully prepared to see the matter through to a hearing before deciding whether or not to make an application.

How to make an application under section 162

When making this type of application, an application notice specifying the grounds on which the application is being made, and whether an eligible insolvency practitioner is being proposed, is filed at Court with a supporting affidavit. If one is being proposed, the application must identify who the proposed insolvency practitioner is and the supporting affidavit should (amongst other things) exhibit a notice of eligibility and a consent to act signed by the insolvency practitioner where one is being proposed. ⁵

Where an applicant is making an application to appoint liquidators for more than one company, separate affidavits must be filed in support of each application.

Unless the company is the applicant, a sealed copy of the application for the appointment of a liquidator, together with the supporting affidavit, should be served on the...