Insolvency 2025

BRITISH VIRGIN ISLANDS Trends and Developments Contributed by: Matthew Freeman and Stuart Rau, Maples Group

whom the Commission will engage on VASP issues, supported by representatives from the FSC. The jurisdiction’s commitment to developing a robust and credible digital assets ecosystem was empha - sised by representatives from the BVI government at the Fintech on the Seas conference in late June 2025. Topics of interest included tokenised funds, stablecoin issuance and institutional blockchain solutions. The BVI offers a clear regulatory advantage for the digi - tal asset industries, and the jurisdiction continues to shape its position as the premier offshore jurisdiction for digital assets. Developments Expansion of grounds for appointing a liquidator In January 2025, the BVI government passed amend - ments to the BVI Insolvency Act, 2003 that expanded the grounds for appointing a liquidator over a com - pany (whether incorporated in the BVI or abroad). The amendments to Sections 162 and 163 of the Insolvency Act now permit the FSC to apply to appoint a liquidator in circumstances where a company or a foreign company: • has been involved in or convicted of money laun - dering, terrorist financing or proliferation financing; • breaches or contravenes any enactment relating to sanctions or embargoes; or • is otherwise engaged in an activity that the FSC considers not to be in the best interest of the BVI’s financial services industry or the public interest. These amendments give the BVI regulators more powers to curtail companies that are or have been involved in international criminality. Standing to challenge the decision of liquidators The Privy Council, on appeal from the BVI Commer - cial Court and the Eastern Caribbean Supreme Court (Court of Appeal), recently considered the standing of an individual to challenge the decision of a liquidator. Pursuant to Section 273 of the Insolvency Act, certain categories of individuals may apply to the BVI court if they are aggrieved by the decisions or actions of liquidators.

The case involved Barrington Capital Group Ltd (BCG), a BVI company that carried on business as an investment fund. BCG advanced a series of loans to a US company, Petters Company Inc (PCI); however, it was subsequently discovered that PCI was part of a fraudulent Ponzi scheme. Chapter 11 proceedings were commenced in the USA, and a trustee was duly appointed over PCI (the “US Trustee”). In 2009, BCG entered voluntary liquidation. In 2010, Steven Stevanovich (SS) was BCG’s sole director and duly resigned, with a corporate director being appointed to manage the liquidation. A liquidation plan was approved, and a dividend was declared and distributed to BCG’s shareholder valued at USD10.3 million. Subsequently, the US Trustee filed a complaint in Minnesota against BCG, SS and others, claiming USD3.2 billion. BCG was dissolved in January 2011. No provision was made for the US Trustee’s claims. In 2013, the US Trustee applied to have BCG’s dis - solution declared void. The BVI Commercial Court granted the application and restored BCG to liqui - dation under the court’s supervision. The US Trus - tee submitted a claim in the liquidation for USD424.4 million, which was admitted by the liquidators in the sum of USD398.5 million, causing the company to be rendered insolvent (the “Claim”). In 2016, the liquidators brought proceedings in the BVI against SS on the basis that he engaged in fraudulent trading and misfeasance in respect of distributions made by BCG (the “Main Proceedings”). A year after filing his defence in the Main Proceedings, SS applied under Section 273 of the BVI insolvency Act, 2003 (as revised) (the “Act”) for the reversal of the admission of the Claim on the basis that it was wrongly admitted. The Main Proceedings were stayed pending determination of the application. The Privy Council Board dismissed SS’s appeal, find - ing that he did not have standing to rely on Section 273 of the Act. This was the first case before the board concerning Section 273 of the Insolvency Act and offers important guidance to office holders and aggrieved parties.

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