British Virgin Islands bankruptcy law

The previous legislation was largely piecemeal and eventually resulted in a comprehensive review which led to the enactment of the 2003 statute.

In practice, this meant that no bankruptcies were possible, because the delegation of certain key provisions, including the particulars of preferred creditors, were deferred to the rules.

Where a company is unable to pay or provide for its debts it may be placed in liquidation either voluntary by a resolution of members or compulsorily by an order of the court.

British Virgin Islands law uses the phrase "in liquidation" in preference to the term "winding-up" used in other jurisdictions.

Although the Insolvency Act does not focus on rehabilitation of financially distressed companies, the legislation does contain various provisions for corporate rescue.

If a company had granted a floating charge the court may not make an administration order without the consent of the holder.

The voidable transactions regime contains certain provisions designed to protect bona fide attempts to provide credit to financially distressed companies and individuals.

A foreign insolvency practitioner may act jointly with a licensed insolvency practitioner provided that (a) the Financial Services Commission has been notified in advance of the proposed appointment in writing and has not objected within the statutory time limit.

Most corporate insolvencies in the British Virgin Islands involve a cross border element.

Part XVIII is based upon the UNCITRAL Model Law on Cross-Border Insolvency,[14] The provisions do not sit easily within the remaining structure of the Insolvency Act as they are predicated on the centre of main interest (or "COMI") concept, which is otherwise unknown under British Virgin Islands law, and that Part has not yet been brought into force.