This Is Not A Wind-Up: BVI Court Approves Restructuring Provisional Liquidation

In a major development in BVI insolvency law and practice, the BVI Commercial Court has held in the case of Constellation Overseas Limited and 5 others [BVIHC (Com) 2018/0206 – 2012] that provisional liquidation is available to facilitate a restructuring. The decision brings the BVI broadly into line with Cayman and Bermuda, where restructuring provisional liquidations have been used to support a number of landmark cross-border restructurings in recent years

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In the proceedings, six BVI companies (part of a group headquartered in Brazil) sought the appointment of provisional liquidators to support the group’s restructuring, which is driven by a Brazilian Judicial Reorganization procedure. That was in turn supported by Chapter 15 proceedings in the USA. The companies required the protection against “predatory creditor claims” afforded by the moratorium imposed by a BVI provisional liquidation; there was no current intention to wind up the BVI companies or the group.