British Virgin Islands

The British Virgin Islands in the five years since the inception of the Insolvency Regime has experienced a tremendous growth in the Recovery and Insolvency Industry. There now exist an established group of licensed Insolvency Practitioners (IP) carrying out work under the Insolvency Act (Act). The Financial Services Commission (FSC), the regulatory body under the Act, has conducted a round of onsite inspections on licensee’s practices to ensure that legislation, prudential standards and best practices are followed. A regime to investigate and conduct Director’s Disqualification and establishes a Register of Disqualified Directors is being formulated.

The British Virgin Islands was chosen as the venue for the launch of a new Commercial Court. This Court is an extension of the Eastern Caribbean Supreme Court (ECSC) which hears commercial matters from Caribbean territories such as Anguilla, Antigua and Barbuda, Grenada, Dominica, Montserrat, St Kitts and Nevis, St Lucia, St Vincent and the Grenadines.

The Commercial Court opened on 30 October, 2009 with Judge Edward Bannister QC presiding over all matters. As the BVI has over 400,000 active companies, this court has become a key litigation centre for offshore lawyers.

The BVI as a member of the ECSC has the Privy Council as its Court of Final Appeal.

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
• Anti-Money Laundering Regulations, 2008
• Anti-Money Laundering and Terrorist Financing Code of Practice, 2008

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 ( commencement date not yet announced)
• Receivership
• Administrative receivership
• Provisional Liquidation
• Liquidation (liquidator appointed by the Court or by members)
  
  

Roles

Role played by Government

No direct role is played by Government. The British Virgin Islands Financial Services Commission (the “FSC”), 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). Insolvent 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.

On 11 December, 2009 the Restructuring and Insolvency Specialist Association (BVI) limited (RISA) was formed. This body consists of approximately 45 industry professionals in the insolvency field. The organisation is a member association of the International Association of Restructuring, Insolvency & Bankruptcy Professionals (INSOL International). The organization seeks to promote the insolvency profession and continuous development of its members by offering continuous professional development programs.

Role played by the Court

The High Court determines petitions for the appointment of administrators, provisional liquidators, liquidators and bankruptcy trustees. 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?