Where an Originating Application for the appointment of liquidators has been filed with the BVI Court, it is open to the applicant, a creditor, the company or a member (with leave of the Court) to make an application to Court for the appointment of provisional liquidators.
The Court has the discretion to appoint provisional liquidators where the company consents to the appointment or the Court is satisfied that the appointment is necessary for the purposes of maintaining the value of the assets of the company, or is otherwise in the public interest.
The powers of provisional liquidators are limited to the extent necessary to maintain the value of the company's assets. The appointment of provisional liquidators is however an important tool to protect the position whilst an Originating Application is pending, especially where those connected with the Company are likely to dissipate assets. It is important to note that unlike other jurisdictions, such as the Cayman Islands, provisional liquidation does not act as a moratorium on claims being brought against the company.
The BVI is a creditor friendly jurisdiction and accordingly the BVI Court is willing to assist creditors by making provisional liquidation appointments where a company's assets are under threat. For example, Walkers obtained an order for the appointment of provisional liquidators in circumstances where a ship belonging to an insolvent shipping company was burning through US$10,000 of fuel per day as well as other expenses. The appointment allowed the provisional liquidators to have the ship arrested and the assets of the company preserved for the benefit of the company's creditors.
Matthew Neal is an associate in the Insolvency and Dispute Resolution Department of Walkers in the BVI.
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