British Virgin Islands

New insolvency legislation, centered on the Insolvency Act 2003, came into force on 16 August, 2004. The new legislation provides a comprehensive modern insolvency regime, including provisions for:

• the licensing and regulation of insolvency practitioners
• the establishment of an Official Receiver's office
• a directors disqualification regime
• a wide range of liquidation and rehabilitation options (rehabilitation options are carefully designed to safeguard the interests of secured creditors)
• assistance in multi-jurisdictional insolvency situations

New companies legislation, The BVI Business Companies Act, 2004, came into force on 1 January, 2005. The BVI Business Companies Act, 2004 contains the provisions for striking off, solvent liquidations and some of the provisions for the liquidation of segregated portfolio companies. This Act will operate in tandem with the previous companies’ legislation (the Companies Act and the International Business Companies Act) for a transitional period of two years from 1 January, 2005.

Key Legislation

• Insolvency Act, 2003
• Insolvency (Amendment and Consequential Provisions) Act, 2004
• Insolvency (Transitional Provisions) Regulations, 2004
• Insolvency Practitioners Regulations, 2004
• Insolvency Code of Practice
• Insolvency Rules 2005
• BVI Business Companies Act, 2004
• Companies Act
• International Business Companies Act

Insolvency Procedures

Personal Insolvency procedures

The following insolvency procedures are available to individuals:

• Individual creditors’ arrangement
• Bankruptcy

Corporate Insolvency procedures

The following insolvency procedures are available to companies:

• Solvent winding-up and striking off
• Company creditors’ arrangement
• Administration (but commenceement date not yet announced)
• Receivership
• Administrative receivership
• Provisional Liquidation
• Liquidation (liquidator appointed by the Court or by members)
  

Roles

Role played by Government

No significant role is played directly by Government. The British Virgin Islands Financial Services Commission (the “Commission”), a statutory corporation and an autonomous regulatory agency of the Government, has responsibility for;

• The licensing and regulation of insolvency practitioners
• The appointment of an Official Receiver

The Official Receiver acts as an insolvency office holder when appointed by the Court and has other functions generally intended to assist with the smooth operation of the insolvency sector. It is also the Official Receiver’s responsibility to make the applications to Court for director’s disqualification orders and bankruptcy restriction orders.

Role played by private sector practitioners

Private sector practitioners perform all personal and corporate insolvency procedures (except those cases where the Official Receiver is appointed by the Court). Insolvency office holders (other than the liquidators of solvent liquidations, initiated pursuant to the Companies legislation, and receivers in receiverships that are not administrative receiverships) must hold an insolvency practitioner’s licence issued by the Commission.

Provisions exist to enable BVI licensed insolvency practitioners to take appointments jointly with overseas practitioners.

Role played by the Court

The Court determines petitions for the appointment of administrators, provisional liquidators, liquidators and bankruptcy trustees by the Court. The Court also rules on insolvency matters brought to it by insolvency office holders, creditors and others.

At a Glance

Does the insolvency system in the British Virgin Isands allow for:

1.	Different procedures for the insolvency of individuals and the insolvency of companies?
2.	Creditors to accept an arrangement outside of formal bankruptcy/liquidation proceedings?
3.	Priority payment for employee creditors?
4.	Priority payment for taxation debts?
5.	Automatic disqualification of directors of failed companies from managing other companies?
6.	Recognition of insolvency proceedings being conducted in another jurisdiction?
7.	A government agency to undertake insolvency administration work?
8.	Some form of licensing of private sector practitioners?
9.	A review of the remuneration claimed by an insolvency practitioner by either a court or other government regulator?
10.	A mandatory scale of fees applicable to insolvency practitioner remuneration?
11.	Surveillance of the work of private sector practitioners by a government regulator?
12.	Collation of insolvency statistics by a government regulator?