Orders in aid of Foreign Insolvency Proceedings: BVI expands access to part XIX regime

The BVI Insolvency Act 2003 permits offices holders in specified foreign jurisdictions to seek assistance and relief from the BVI Court. The list of relevant jurisdictions was extended in September 2024 and now covers 33 countries, which is welcome news for creditors, shareholders and insolvency practitioners.

Background

Part XIX of the BVI Insolvency Act, 2003 (Act) sets out a statutory regime empowering the BVI Court to grant orders in aid of foreign insolvency proceedings. It permits office holders (e.g. liquidators, trustees in bankruptcy etc) appointed in specified foreign jurisdictions to apply to the BVI Court seeking assistance and relief.

Foreign office holders can apply to the BVI Court seeking a range of helpful orders under Part XIX, for example:

• commencing or restraining court proceedings in the BVI;
• delivery of the debtor’s assets; and
• coordination of BVI insolvency proceedings and foreign insolvency proceedings.

However, assistance and relief under Part XIX of the Act is only available to office holders appointed in certain jurisdictions. Those “relevant foreign countries” are designated by the BVI Financial Services Commission (Commission).

In August 2005, the Commission published the list of “relevant foreign countries” (List), which was limited to nine countries:

While the List included several jurisdictions which regularly feature in cross border insolvency proceedings, other key jurisdictions were omitted (e.g. Bermuda, the Cayman Islands, Guernsey).

In addition, the nature and location of cross border restructuring and insolvency work has moved on since 2005. For example, Japanese insolvency proceedings with BVI aspects arise infrequently. However, corporate structures featuring entities and / or assets in the BVI, Bermuda, the Cayman Islands and Hong Kong are common.

Recent Developments: an extended List

In September 2024, following consultation with local insolvency practitioners, the Commission published an expanded List, featuring twenty-four new jurisdictions¹:

Commentary

HFW has a wealth of experience in advising office holders, creditors and shareholders in relation to cross border insolvency proceedings, including BVI liquidations. 

Many BVI insolvency proceedings have cross-border aspects, as do the majority of the high value, complex, disputes which are litigated before the Commercial division of the BVI High Court. BVI corporate entities are frequently used as holding companies in respect of international business operations and / or asset holding structures, as funds which are promoted internationally, and special purpose vehicles used to invest in cross border corporate structures.

Increased access to the Part XIX regime will enable insolvency practitioners appointed in key jurisdictions to secure assistance and relief from the BVI Court, where necessary, reducing the need to incur additional costs and delay by filing parallel insolvency proceedings and / or litigating in the BVI. The Commission’s decision to expand the List is therefore both timely and welcome.

Contact us

This article provides a high-level overview of Part XIX of the BVI Insolvency Act 2003. Should you need further guidance please contact our BVI team or your usual HFW contact.

Footnotes

1. The Notice issued by the Commission can be read here.