Harneys has recently acted for a client and obtained an order from the BVI High Court for the appointment of a liquidator over a re-insurance company under the BVI Insolvency Act. The novelty in this case was that the company was not insolvent, and the Court ordered a winding up on the basis of just and equitable principles as the company did not intend to conduct further business in the BVI following a re-organisation of the group's global business. It is notable that the BVI Business Company Act does not permit long term re-insurance companies being placed into liquidation, for example by resolutions of members, as is available for other companies, and the only option available to long term re-insurance companies in the BVI that wish to transfer their business and be placed into liquidation, is that of applying to the Court for the same under the BVI Insolvency Act.
Liquidation can be a useful tool for re-insurance businesses seeking to transfer their business to other entities particularly within a wider group structure, and a court order is a quick and orderly way to effect a re-organisation. Clearly there are likely to be regulatory issues, and it is recommended that the BVI's Financial Services Commission ("FSC") is involved at an early stage. As the company will be a regulated entity, the court will require the attendance of the FSC in the proceedings, and clearly both the FSC and the court will need to be satisfied that the re-organisation is a proper one, and there are proper reasons to justify the making of the order thus placing the company into liquidation. The liquidator will then have the extensive powers under the Insolvency Act to complete the scheme and dissolve the company.
There are other such applications in the pipeline, but this was the first one made in the BVI.
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