Conyers' Partner Richard Evans contributed the BVI content for the INSOL International/World Bank Group publication "Global Guide: Measures adopted to support distressed businesses through the COVID-19 crisis". The Q&A and link to the full report can be found below:
1. Government policy responses
At this time, no formal measures have been announced concerning any bail-out packages, guarantees, loans or stimulus packages in response to the Covid-19 outbreak, although the British Virgin Islands (BVI) Government has indicated that such matters are under review. The vast majority of government intervention has been in the context of public health, in particular, in an attempt to prevent or limit the spread of Covid-19 in the BVI. The BVI Government has announced a number of measures, including closing ports of entry and absolute and limited curfews for the territory as a whole.
2. Legislative reforms impacting on stakeholders dealing with companies in financial distress
No formal measures have so far been introduced by the BVI Government in an attempt to deal with the impact of the Covid-19 epidemic on employees, lenders or third parties, such as suppliers. The BVI Government has made policy statements encouraging landlords and telecom suppliers to exercise caution in taking any steps to enforce default events. It has been reported that the BVI Government has been seeking international assistance for the purpose of providing financial help to those employees who have been placed on unpaid leave or have had their contracts terminated as a result of the fallout from the epidemic. However, no such package has yet been formally announced.
3. Legislative reforms for companies in financial distress
As far as we are aware, no changes have been made in this area.
4. Financial and regulatory measures
On 19 March 2020 the BVI International Tax Authority (ITA) published a press release setting out its views on the possible impact of the Covid-19 epidemic on reporting deadlines, including the potential impact on the new economic substance requirements. In that document the ITA stated that it expects to maintain its operational frameworks and meet its international obligations, notwithstanding the Covid-19 epidemic. However, whilst it does not anticipate making any changes to previously announced deadlines, it was made clear that in regard to economic substance, the ITA intends to adopt a 'reasonable and practical approach' when faced with entities making adjustments to their operating practices in order to mitigate the threats from Covid-19. The ITA stated that it would not prejudice those legal entities who temporarily adjust their normal operating practices as a result of Covid-19.
On 27 March 2020, the ITA provided a further press release, setting out additional information that entities should bear in mind in relation to economic substance. In particular, the ITA explained that:
- Where possible, recourse should be had to the appointment of alternate directors in the BVI in order to meet substance requirements;
- all directors do not have to attend Board meetings in the BVI – only as many as required to make the meeting quorate (given social-distancing protocols, virtual meetings may be preferred);
- not all Board meetings need to be held in the BVI – only those related to core income-generating activities;
- where it is still not possible to have a Board meeting in the BVI or to meet some other substance requirement due to restrictions (whether in the BVI or otherwise) due to the Covid-19 outbreak, entities are urged to retain documentation in respect of the periods of time affected, to be able to support such claims; and
- individual requests should be made to the ITA for any extension of time within which to comply with notices, along with any supporting evidence.
Save for the guidance in those press releases, there have been no further official announcements from the BVI Government or any relevant public authority at this time.
5. Specific measures for micro and small businesses (specifically sole proprietorships)
We are not aware of any reforms having been effected in this area in response, specifically, to Covid-19.
6. Measures introduced by the courts to deal with increased insolvency cases
6.1 Increased e-filings and virtual hearings
A large number of cases before the BVI Commercial Court are already subject to a well-established e-filing process, namely via the Eastern Caribbean Supreme Court E-Litigation Portal. In respect of those matters, filings have continued as normal. However, in relation to those (older) matters that are not subject to e-filing, the Eastern Caribbean Supreme Court has recently implemented new practice directions that require filings in those matters to be effected electronically, by emailing the relevant document(s) to a designated e-filing email address. Filed documents can also be served on the other parties by email, rather than in hard copy.
In terms of court hearings, all in-person appearances are now discouraged (and the current absolute curfew prohibits in-person hearings from taking place) and can only take place where a judge deems it necessary. However, the BVI Commercial Court is continuing to hear matters remotely, either by videoconference or teleconference. Hearing bundles are now provided electronically, rather than in hard copy.
Although hearings are continuing as normal, we anticipate that the court will be receptive to requests for adjournments, where the request for an adjournment arises from the impact or consequences of Covid-19 (and the prejudice otherwise suffered by an adjournment can be ameliorated).
6.2 Increased hiring of court staff
As far as we are aware, no additional resources have been committed by the BVI government for the purpose of hiring of additional court staff in response to Covid-19.
6.3 Increased use of out-of-court mechanisms
No additional measures have been put in place, as a result of Covid-19, to encourage or require parties to engage in alternative dispute resolution methods. However, we anticipate that the financial impact of Covid-19 is likely to lead to an increase in the number of out-of-court settlements, or parties seeking time to explore settlement.
7. Other pending reforms
To view the full report, please click here: https://www.insol.org/library/opendownload/1570
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.