BVI Court of Appeal Confirms Procedure for Recognition of Foreign Representatives in Insolvency

Walkers acted for the successful Respondent in defeating an Appeal by a Bankrupt against an order recognising the Trustee in Bankruptcy.

Part XIX of the BVI Insolvency Act permits the BVI Court to recognise and assist a foreign representative appointed in insolvency proceedings in certain overseas jurisdictions. In May 2016, Walkers reported on the approach adopted by the BVI Commercial Court in recognising a Trustee in Bankruptcy appointed by the Tokyo Bankruptcy Court. The Bankrupt appealed the Order on the basis that the BVI Insolvency Rules 2005 required that he be served with the application for recognition and that he had not been served.

In dismissing the Appeal (Pereira CJ, Blenman and Gonsalves JAA), the Court held that the recognition procedure was directed to securing the assistance of the BVI Court in aid of the foreign court to whose supervision the principal insolvency proceedings were subject. There was therefore no requirement, and the Insolvency Rules imposed no requirement, that the debtor/bankrupt be joined as a party to the recognition application.

The Court also made an Order that the Bankrupt pay the costs of the Appeal personally, accepting the submission made on behalf of the Respondent that, as a matter of principle, the costs of an unsuccessful appeal should not be paid out of assets falling within bankruptcy estate, with the result that they would reduce the amount available for creditors.

Walkers acted for the Respondent, the Trustee in Bankruptcy, Partner Rosalind Nicholson and Associate Colleen Farrington, based in Walkers' BVI office, appeared on the appeal, instructed by Rowena Lawrence, Partner in Walkers Hong Kong office.