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The BVI insolvency regime has been considered by some to be essentially a creditor friendly one. The Insolvency Act 2003 (“the Act”) and the Insolvency Rules 2005 (“the Rules”) provide the legislative framework which is largely responsible for the jurisdiction earning this characterisation. Within that framework there are a number of insolvency mechanisms available in the BVI, namely: liquidation, creditor arrangements, receivership, administrative receivership and (possibly in the future) administration. It should be noted that the administration regime under Part III of the Act, which allows insolvent companies to be reorganised and refinanced, supported by a statutory moratorium has not yet come into force and it appears that it is unlikely to be brought into force in the near future.
The companies covered under the Act and Rules are companies registered under the BVI Business Companies Act 2004 and companies registered under the International Business Companies Act, which were re-registered as BVI business companies on 1 January 2007. Licensed entities such as banks, trust companies and investment funds are subject to the same proceedings as BVI business companies, except for the additional requirement of notice to the relevant regulator. There are separate provisions for licensed BVI insurance companies, which we do not intend to address in this article.
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Creditors Rights in Insolvency Proceedings: A Practical Guide for Smaller Practices – BVI