Leave it to the Liquidators: The Court’s supervisory role in BVI liquidations after Jin Yao v Forever Winner

Everyone familiar with the English Court’s practice in winding up companies under the Insolvency Act 1986 will recognise the ‘usual compulsory order’: the order by which a company is placed into compulsory liquidation by the Court. The usual compulsory order (sometimes called the ‘usual tripartite order’) classically contains three provisions: (i) that the company be wound up under the provisions of the Insolvency Act 1986; (ii) that the official receiver be appointed as liquidator of the company; and (iii) that the petitioner’s costs be costs of the liquidation.

The standard BVI order takes a different form. First, the statutory jurisdiction under the Insolvency Act 2003 ('IA') is framed in terms of the appointment of a liquidator (who can be, but rarely is, the Official Receiver), and the convention is that the first paragraph of the order provides that ‘[X] be and is hereby appointed as liquidator of the company’.

Second, although IA section 186(1) provides that a liquidator has ‘the powers necessary’ to carry out his or her functions and duties (including those expressly conferred), and IA section 186(2) confirms that, without limiting subsection (1), a liquidator has the powers specified in IA Schedule 2, BVI practitioners commonly set out the Schedule 2 powers in full on the face of the order or in an annex. This practice has developed because BVI liquidators frequently rely on the appointment order outside the jurisdiction, including in recognition and assistance applications. When an order is deployed abroad, it is often helpful for the receiving court and third parties to see a self‑contained statement of what the office‑holder may do. A Schedule‑2‑on‑its‑face order is, in that sense, ‘portable’. In Jin Yao Holdings Ltd v Forever Winner International Ltd and another^{1 2} (‘Forever Winner’), Mithani J (Ag.) endorsed the utility of this approach, particularly for foreign recognition, but noted that clarity may be achieved either by stating that the liquidator has all powers under IA section 186 and Schedule 2, or by listing those powers expressly.

Third, the standard BVI order makes provision for the applicant’s costs of the application, which (as in England) are payable as costs of the liquidation.

Some BVI practitioners have also made it a practice to include other provisions—such as an express priority for the costs of the liquidation (including the liquidators’ fees and disbursements) and power to retain counsel and agents. These would appear to be redundant: IA section 207 and rule 199 of the Insolvency Rules 2005³ already provide for priority of costs, and paragraph 14 of IA Schedule 2 expressly permits the appointment of a solicitor, accountant or other professionally qualified person to assist in the performance of the liquidator’s duties.

The sanction rider: history and what Forever Winner decides

The significance of Forever Winner is that Mithani J disapproved a standing practice - associated with a standard form of order introduced during the tenure of Bannister J in the early years of the BVI Commercial Court - under which certain Schedule 2 powers were stated in the order to be exercisable only with the sanction of the Court. That practice would appear to have been influenced by the historical position under the English Insolvency Act 1986, which (until 2015) required sanction for the exercise by a liquidator in a compulsory winding up of certain powers⁴. The relevant English categories broadly corresponded to paragraphs 1–5 of Schedule 2 in the IA and capture the most consequential steps (litigation, continuation of business, compromises and arrangements affecting the estate). In the BVI, however, although IA section 186(3) allows the Court to provide that certain powers may only be exercised with the sanction of the Court, the IA does not - and never did - impose any statutory requirement for prior sanction in respect of any Schedule 2 power. The sanction rider was therefore always a convention rather than a statutory limitation.

The key point in Forever Winner is that the Act makes ‘no sanction’ the starting position and leaves sanction (if any) to the Court’s discretion under IA section 186(3). On a true reading of the IA, the default position is that the liquidator may exercise the powers conferred by the IA and Schedule 2 without sanction, and section 186(3) operates as an exception. Two consequences follow: (i) a requirement for sanction is not automatic for any category of Schedule 2 power; and (ii) if restrictions are to be imposed, they must be justified by reference to the circumstances of the particular case and must be expressly and narrowly identified.

Why Mithani J is right

Mithani J’s conclusion follows directly from - and accords with - the scheme of the IA. Section 186(1) confers on the liquidator ‘the powers necessary’ to carry out the functions and duties of the office; section 186(2) then provides - ‘without limiting’ that general grant - that the liquidator also has the powers specified in Schedule 2. Schedule 2 is therefore illustrative, not restrictive: it enumerates particular incidents of the office within the broader ‘all powers necessary’ formulation. Against that structure, IA section 186(3) is properly read as a discretionary safety‑valve: it permits the Court, in an appropriate case, to require sanction for specified powers, but it does not impose any automatic condition on the exercise of Schedule 2 powers. The statutory starting point is therefore ‘no sanction’, and, as Mithani J said, any departure must be justified by reference to the circumstances of the particular case.

That no‑sanction default also reflects the institutional and regulatory framework within which BVI liquidators operate. Court‑appointed liquidators are officers of the Court and remain subject to Court supervision, including targeted sanction requirements where justified, removal, and the Court’s power to confirm, reverse or modify an office‑holder’s act, omission or decision in an appropriate case. But the regime does not envisage the Court acting as a standing appellate body for routine questions of liquidation strategy. The restraint is deliberate: liquidators are expected to bring their own professional and commercial judgment to bear, subject to after‑the‑event control where necessary, rather than routine ex ante approvals. That expectation is reinforced by external regulation. The Financial Services Commission licenses and supervises insolvency practitioners in the BVI⁵. Licensed practitioners are also subject to the Insolvency Code of Practice, issued under statutory powers, which prescribes ethical and technical standards (including integrity, objectivity, competence and due skill) and carries regulatory consequences for non‑compliance⁶. In that context, the Court’s role is strictly supervisory rather than managerial: it intervenes to prevent misuse of powers, not to decide or re‑decide questions properly left to the liquidator's professional or commercial judgment.

The authorities reflect that restraint. In Kevin Gerald Stanford v Stephen John Akers and Mark McDonald (as Joint Liquidators of Chesterfield United Inc.)⁷, the Eastern Caribbean Court of Appeal held that, bad faith and fraud apart, the Court will interfere only where a liquidator’s act is so perverse and manifestly absurd that no reasonable liquidator could have made it, and that it is not open to the Court to substitute its own view or to ask whether the ‘best’ course was chosen.

The Privy Council’s decision in Steven Goran Stevanovich v Matthew Richardson and another (as Joint Liquidators of Barrington Capital Group Ltd (In Liquidation))⁸  is also consistent with this model: it records an attempt to invoke the Court’s inherent supervisory jurisdiction over liquidators ‘as its officers’, while emphasising that standing to challenge under section 273 of the IA is confined and context‑sensitive.

It is worth noting that Parliament removed the statutory sanction requirement for the equivalent powers in England and Wales with effect from 26 May 2015⁹.  The BVI position, however, has always been that sanction is discretionary and case‑specific under section 186(3). Forever Winner properly restores that statutory logic.

Mithani J indicated that he proposed to consult further (including with judicial colleagues and, if appropriate, the Court Users Committee or members of the local Bar). Pending that consideration, if the powers conferred on a liquidator are to be made subject to prior sanction in any particular case, then the power or powers that are to be so subject must be expressly identified in the draft Order placed before the Court and the requirement justified by reference to the circumstances of the case.  

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¹ BVIHC (COM) 2023/0064, Judgment of Mithani J KC (Ag.), 11 December 2025

 ³ SI 45/2005 and Act 1 of 2008 (as amended)

 ⁴ Insolvency Act 1986, s 167 (and Schedule 4) 

⁵ IA Part XX 

⁶ Insolvency Code of Practice (issued under s 487 of the Insolvency Act 2003)(as amended)

⁷ BVIHCMAP2017/0019, Eastern Caribbean Supreme Court (Court of Appeal), Territory of the Virgin Islands, judgment delivered 12 July 2018

⁸ (Virgin Islands) [2025] UKPC 18, Judicial Committee of the Privy Council, judgment 15 April 2025

⁹ S120 of the Small Business, Enterprise and Employment Act 2015 amending s 167 and schedule 4 headings