Maples and Calder, the Maples Group's law firm is pleased to welcome the BVI Commercial Court's first published judgment, in the Matters of Durant International Corp (in Liquidation), Kildare Finance Ltd (in Liquidation), MacDoel Investment Limited (in Liquidation) BVIHC (COM) 2017/134, 2017/135, 2019/0020, concerning orders sanctioning the pooling of concurrent related liquidations. The firm's BVI Dispute Resolution & Insolvency team led by BVI partner, Alex Hall Taylor and including David Welford and Scott Tolliss, prepared and advanced the applications before the Honourable Justice Jack, acting on behalf of the Grant Thornton joint liquidators, Kevin Hellard and Matthew Richardson.
The background underpinning the liquidations is a proven fraud carried out by Paulo Salim Maluf, during his tenure as Mayor of São Paulo, in the mid-1990s. Amongst the entities used to facilitate and move the proceeds of the fraud were three BVI companies, all of which are now in liquidation with the same joint liquidators appointed over each company.
The firm sought sanction for the estates of the three companies to be pooled for the purposes of reporting, distributions, and the payment of fees and expenses. In line with existing English authority, jurisdiction was established through the Court's power to sanction the exercise of the liquidators' powers under the order appointing them or under schedule 2 of the Insolvency Act 2003.
Drawing on persuasive English, Cayman Islands and Jersey authority, the justification for seeking sanction for pooling was that:
- there was an overlap and intertwined ownership and control of the companies;
- funds had been moved between them such that there were or were likely to be intermingled funds or claims between them;
- there is commonality of creditors across each of the estates, and the Brazilian creditors approved of pooling;
- it was immaterial to the creditors where and from which of the estates future distributions or remuneration payments are made;
- time spent, complexity and expense would unnecessarily be increased by maintaining the separation of the estates; and
- it was therefore in the best interests of the creditors to pool them.
On that basis the Judge acceded to the orders sought by the firm and, in sanctioning the use of pooling powers by the liquidators, was moved to issue a public judgment, to confirm the availability of pooling orders in similar cases for the future benefit and certainty of insolvency practice.
The Group's law firm continues to assist Grant Thornton and others in numerous jurisdictions in tracing and securing monies and assets, for the benefit of the estates and their creditors, comprising the Federal Republic of Brazil and the Municipality of So Paulo.