Lennox Paton updates

Payment of preferential debts out of assets subject to floating charge not permitted
Lennox Paton
  • Private Client & Offshore Services
  • Bahamas
  • October 26 2017

The Supreme Court recently considered whether preferential creditors have any claim against the moneys received by receiver-managers for the sale of assets subject to a charge. The court determined that a floating charge which crystallised before the making of a winding-up order takes priority over other creditors.

Privy Council clarifies Bahamian law on appealing interlocutory judgments
Lennox Paton
  • Private Client & Offshore Services
  • Bahamas
  • June 15 2017

There has been some debate over the lack of clarity regarding the concurrent jurisdiction of the Supreme Court and the Court of Appeal as to where and when applications for leave to appeal and stays should be made. A recent Judicial Committee of the Privy Council ruling has clarified this area of the law and given attorneys clear guidance regarding the proper procedure for appealing interlocutory judgments and applying for a stay pending appeal in the Bahamas.

Remittal of assets in cross-border insolvency proceedings
Lennox Paton
  • Private Client & Offshore Services
  • Bahamas
  • April 20 2017

The Bahamas Supreme Court recently considered the relationship between the statutory provisions in recognition proceedings which permit the turnover of property to a debtor (a foreign corporation or other foreign legal entity subject to a foreign proceeding in the country in which it is incorporated or established) and the common law power to direct remittal of assets to the foreign main proceedings where an ancillary liquidation is underway.

Hastings-Bass rule enshrined in law
Lennox Paton
  • Private Client & Offshore Services
  • Bahamas
  • April 13 2017

The recently enacted Trustee (Amendment) Act has clarified the law relating to trustee indemnities and given statutory effect to the rule in Re Hastings-Bass. With the passing of the act, the Bahamas has fortified its position as a leading offshore financial centre. It is expected that the codification of the rule will benefit trustees, protectors, beneficiaries and other persons who can apply to the court to unwind any perceived hard consequences flowing from an exercise of a fiduciary power.

Receiver-managers obtain court's blessing: self-dealing and fair-dealing rules not violated
Lennox Paton
  • Private Client & Offshore Services
  • Bahamas
  • December 15 2016

The joint receiver-managers of the assets of Baha Mar applied to the Supreme Court for a direction that the intended sale of Baha Mar's secured assets to a special purpose vehicle (SPV) would not amount to self-dealing or infringe the fair-dealing rule. The court was satisfied that the sale to the SPV was pursued by the joint receiver-managers in good faith and achieved after adequate precautions were taken to achieve the best price reasonably obtainable at the time.

Bahamian law on disclosure of trust information
Lennox Paton
  • Private Client & Offshore Services
  • Bahamas
  • December 08 2016

The case of Dawson Damer v Taylor Wessing arose out of a dispute between a beneficiary of trusts governed by Bahamian law and a Bahamian trustee. The beneficiary made subject access requests under the UK Data Protection Act 1998 to the trustee's London solicitors who refused to provide the information. This resulted in the beneficiary applying to the court for an order requiring the law firm to comply with the subject access requests.

Legal proceedings stayed in favour of mediation in accordance with Arbitration Act
Lennox Paton
  • Private Client & Offshore Services
  • Bahamas
  • September 15 2016

The Supreme Court recently determined that legal proceedings should be stayed based on the construction of the dispute clause in an arbitration agreement. The court held that there is persuasive authority even where an arbitration clause is discretionary, and that a party retains the option of invoking this authority. It was therefore reasonable for the court to conclude that referral to mediation was contemplated before arbitration proceedings could be pursued.

Supreme Court exercises statutory jurisdiction to wind up foreign company
Lennox Paton
  • Private Client & Offshore Services
  • Bahamas
  • June 23 2016

The Supreme Court of the Commonwealth of the Bahamas has acceded to the petition for Caledonian Bank Limited to be wound up as a foreign company pursuant to the Companies Winding-up Amendment Act, thereby exercising its jurisdiction for ancillary winding-up proceedings to be entered into. A petition was filed to wind up the insolvent company in the Bahamas so that the company's liquidators could access property in this jurisdiction.

Bahamas designates list of relevant foreign countries
Lennox Paton
  • Private Client & Offshore Services
  • Bahamas
  • May 19 2016

The Liquidation Rules Committee has published the Foreign Proceedings (International Cooperation) (Relevant Foreign Countries) Liquidation Rules 2016. The most recent statutory enactment in relation to corporate insolvency in the Bahamas is the designation of a list of relevant foreign countries to which the Bahamian court will extend international cooperation in insolvency proceedings.

Cayman Bank liquidators denied common law and statutory recognition in the Bahamas
Lennox Paton
  • Private Client & Offshore Services
  • Bahamas
  • March 31 2016

In a "jurisprudentially unattractive" decision, the Supreme Court of the Commonwealth of the Bahamas has refused the liquidators of Caledonian Bank recognition in the Bahamas, where assets in the region of $16 million are held. By refusing recognition to the liquidators, the court has declined to grant assistance to liquidators which are meant to protect the interests of creditors, not the debtors' estate.

Billionaire adjudicated bankrupt under 1869 statute
Lennox Paton
  • Private Client & Offshore Services
  • Bahamas
  • January 21 2016

The Bahamian Supreme Court recently declined to register a composition with creditors sought by Irish billionaire Sir Anthony O'Reilly. The court took the alternative route of adjudicating him bankrupt instead. The decision was based on legal difficulties with the proposed composition under Section 97 of the Bankruptcy Act of 1869.

Supreme Court declines recognition of Chapter 11 proceedings
Lennox Paton
  • Private Client & Offshore Services
  • Bahamas
  • October 01 2015

The Supreme Court of the Bahamas recently dismissed an application seeking various orders in aid of bankruptcy proceedings commenced in the United States concerning various Bahamian companies placed into Chapter 11. There is no equivalent to Chapter 11 under Bahamian law by which breathing space can be created or new capital can be injected on terms acceptable to any reasonable lender.

Insolvency and restructuring – challenges facing companies and individuals
Lennox Paton
  • Private Client & Offshore Services
  • Bahamas
  • March 19 2015

Legislative changes to the insolvency regime in the Bahamas provide for greater international cooperation and increased mechanisms for liquidators to pursue relief against debtors. The amendments provide a more comprehensive legal framework for improved administration of liquidations in order to seek the necessary relief in areas where the statute previously failed to provide any recourse.

Investment funds explained
Lennox Paton
  • Private Client & Offshore Services
  • Bahamas
  • January 22 2015

The Investment Funds Act provides legislation flexible enough to accommodate the needs and growing demands of the financial sector. To be a Bahamas-based investment fund, a nexus to the Bahamas must be established. An investment fund does not include a unit trust, company or partnership where the holder of equity interests cannot redeem its equity interests or require the issuer to repurchase its equity interests.

Government launches 'revolutionary' ICON investment fund
Lennox Paton
  • Private Client & Offshore Services
  • Bahamas
  • October 30 2014

The fund structuring vehicle known as the investment condominium (ICON) is the latest investment product offering from the Bahamian financial services industry. Governed pursuant to the Investment Condominium Act, the ICON is a contractual relationship subsisting between investors, under which the investors agree to pool assets for the purposes of investing those assets as a collective.

Establishment of trusts in the Bahamas
Lennox Paton
  • Private Client & Offshore Services
  • Bahamas
  • May 22 2014

As a common law country Bahamian courts recognise trusts and the relationships that they create. The Bahamas is not a signatory of the Hague Convention on the law applicable to trusts and their recognition, and it is not anticipated that it will be. The assets of a trust are vested in trustees for the benefit of the beneficiaries. Assets may be held directly by the trustees or indirectly through holding companies.

Court sets aside order granting leave to serve summons outside jurisdiction
Lennox Paton
  • Private Client & Offshore Services
  • Bahamas
  • December 12 2013

The Supreme Court of the Commonwealth of the Bahamas has set aside an order granting a liquidator leave to serve a summons outside the jurisdiction on a company incorporated in Bermuda, which sought the recovery of a payment as a fraudulent preference. The liquidator sought a declaration that a payment made to the foreign company before the liquidation amounted to a fraudulent preference payment.

Captive insurance in the Bahamas
Lennox Paton
  • Private Client & Offshore Services
  • Bahamas
  • September 12 2013

The recent insurance industry briefing on the regulatory regime for captives has highlighted a renewed interest in the Bahamas as a jurisdiction of choice for captive companies. The Bahamas enjoys numerous advantages, including accessibility from the United States, an established financial structure and a tax-neutral environment for business. Captive companies are registered as a restricted external insurer under the External Insurance Act.

New real property tax incentives
Lennox Paton
  • Private Client & Offshore Services
  • Bahamas
  • May 16 2013

In an effort to provide tax relief and to update the real property tax register, the Bahamian government has implemented real property tax incentives. Among other things, owners of residential properties who remain current with their payments over the next three years will receive a 5% rebate of their annual real property tax assessment.

Supreme Court rules on liquidators' powers of examination
Lennox Paton
  • Private Client & Offshore Services
  • Bahamas
  • November 01 2012

In a recent landmark insolvency decision, the Supreme Court applied the modern approach to the determination of an application by joint liquidators for the production of documents and the oral examination of the named partners of former auditors of a company in voluntary liquidation. The court held that the liquidators had been unreasonable and that their application was oppressive.

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