BVI Court Rejects "Improper Purpose" Argument in an Application to Set Aside a Statutory Demand

In the recent judgment of the ECSC in the matter of Sumner Group Mining Limited v Zica S.A (BVIHC (Com) 2020/0171, Walkers successfully represented the respondent in defending an application to set aside a statutory demand. Jack J provided helpful guidance on the legal principles in circumstances where it is alleged that a statutory demand had been served improperly for a collateral purpose.

The applicant sought to set aside a statutory demand on the basis of either:

  1. there was a substantial dispute as to the debt owing (pursuant to section 157(1) of the Insolvency Act 2003); or
  2. in the alternative, that substantial injustice would be caused "for some other reason" (pursuant to section 157(2)(b) of the Insolvency Act).

The applicant argued that the same considerations apply to setting aside a statutory demand to the Court's ability to refuse to appoint a liquidator where the appointment is not made for a proper purpose.

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Iain TuckerPartnerT +1 284 852 2230iain.tucker@walkersglobal.com
Tamara CameronSenior AssociateT +1 284 852 2277 tamara.cameron@walkersglobal.com