'Forum shopping' is the practice of choosing the most favourable jurisdiction in which to bring a claim. In principle, there is nothing wrong in seeking to have a case heard in the forum which is most favourable to the client. However, it can lead to some fierce jurisdictional battles, particularly in insolvency, where the choice between debtor and creditor-friendly procedures can be stark. The Commercial Court has been wrestling with this situation over the past 10 months.
The BVI Commercial Court recently clarified whether the BVI Insolvency Act 2003 provides a basis for liquidators to draw fees on account before having formal approval from either a creditors' committee or the court. The court also specifically provided that newly appointed liquidators can draw payments of up to 80% on account of their reasonable remuneration and expenses on an interim basis without the need to obtain prior approval from the creditors' committee or the court.
The receiver arguably represents the most powerful weapon in the armoury available for asset tracing in the British Virgin Islands. As BVI companies are often used as holding vehicles, using a receiver to take control of the corporate structure and move 'downstream' to the assets is a particularly potent strategy. Recent developments in case law have made this remedy more widely available.
The Fairfield Sentry saga continued recently with a new BVI judgment concerning the status of the related US Bankruptcy Court proceedings. The applicants were former registered shareholders of the Fairfield Sentry and Fairfield Lambda BVI feeder funds which had redeemed their shares before Bernard Madoff's fraud was exposed. They sought to prevent the liquidators of the funds from recovering their redemption payments in the US proceedings.
The BVI High Court recently confirmed that the exercise of the court's discretion whether to make, dismiss or adjourn an order appointing liquidators does not necessarily depend on the wishes of the majority of creditors – even when a vast majority of unsecured creditors both in number and by value oppose the appointment of liquidators.