On September 20 2016 the BVI Commercial Court clarified whether the BVI Insolvency Act 2003 provides a basis for liquidators to draw fees on account before having formal approval from either a creditors' committee or the court. The court also specifically provided that newly appointed liquidators can draw payments of up to 80% on account of their reasonable remuneration and expenses on an interim basis without the need to obtain prior approval from the creditors' committee or the court.
This is a welcome development in the fees regime in liquidation, prior to this order, a stricter reading of the act required liquidators to apply to the court each time they were required to draw on the insolvent estate for their remuneration. Many BVI liquidations do not result in the establishment of creditor's committees. Fee approval applications, which can be relatively lengthy and cumbersome, often do not get heard for weeks or months following an appointment.
The guidance will allow BVI liquidators and their third-party appointees to act swiftly and confidently in the immediate aftermath of an appointment without concerns as to immediate cash flow and funding. Approval further to Section 433(1) will still be required so that the office holder's remuneration can be fixed by the creditors' committee or the court at the end of the insolvency process. An undertaking will also be required to repay so that in the event that the drawdown is not approved, the unapproved sums will be repaid to the insolvent estate within a short timeframe.
For further information on this topic please contact Andrew Thorp or Shuvra Deb at Harney Westwood & Riegels' by telephone (+1 284 494 2233) or email ([email protected] or [email protected]). The Harney Westwood & Riegels website can be accessed at www.harneys.com.
This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.
