Vol 0 (2004) - Issue 1

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Insolvency and International Assistance - The Impact of the British Virgin Islands Insolvency Act 2003

Introduction

On 17 April 2003, the British Virgin Islands’ Legislative Council enacted the Insolvency Act, 2003 (“the Act”). This is the most comprehensive piece of legislation to be enacted in the BVI since the International Business Companies Act of 1984.
The Act is expected to come into force simultaneously with the Consolidated Companies Act, which will repeal and replace the existing Companies Act and the International Business Companies Act.
The English Insolvency Rules 1986 have previously been used as a guide to insolvency practice in the Eastern Caribbean. However, there is no statutory basis for their application and the case law has not extended the substantive provisions of the English Insolvency Act to local BVI law. It is anticipated that insolvency rules similar to the English Insolvency Rules 1986 will be made to give effect to the Act.
Parts XVIII and XIX of the Act focus on cross-border insolvency and international assistance. These Parts enable cooperation between the BVI and other jurisdictions in cases of multi jurisdictional insolvency proceedings.

Part XVIII

The stated purpose of Part XVIII is

“to provide effective mechanisms for dealing with cases of cross border insolvency so as to promote the objectives of

(a) Cooperation between
(i) the Court and insolvency administrators of the BVI; and
(ii) the courts and other competent authorities of foreign countries involved in cases of cross border insolvency;
(b) Greater legal certainty for trade and investment;
(c) Fair and efficient administration of cross-border insolvencies that protects the interests of all creditors and other interested persons, including the debtor;
(d) Protection and maximisation of the value of the debtor’s assets; and
(e) Facilitation of the rescue of financially troubled businesses, thereby protecting investment and preserving employment;”