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BVI Business Companies Act, 2004

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Division 3 – Liquidation, Portfolio Liquidation Orders and Administration

150. In this Division, “liquidator” means a voluntary liquidator or an Insolvency Act liquidator and “liquidation” shall be construed accordingly.

151. (1) Notwithstanding the provisions of Part XII, the Insolvency Act or any other statutory provision or rule of law to the contrary, in the liquidation of a segregated portfolio company, the liquidator

(a) shall be bound to deal with the company's assets in accordance with the requirements set out in section 143(5); and

(b) in discharge of the claims of creditors of the segregated portfolio company, shall apply the company's assets to those entitled to have recourse thereto in conformity with the provisions of this Part.

(2) Part XII or the Insolvency Act, as the case may be, shall apply to the liquidation of a segregated portfolio subject to such modifications as are necessary to give effect to subsection (1) and, in the event of any conflict between the provisions in Part XII or the Insolvency Act relating to the liquidation of companies and this Part, this Part shall prevail.

152. (1) Subject to the provisions of this section, if in relation to a segregated portfolio company the Court is satisfied

(a) that the segregated portfolio assets attributable to a particular segregated portfolio of the company (when account is taken of the company’s general assets, unless there are no creditors in respect of that segregated portfolio entitled to have recourse to the company’s general assets) are or are likely to be insufficient to discharge the claims of creditors in respect of that segregated portfolio; and

(b) that the making of an order under this section would achieve the purposes set out in subsection (3);

the Court may make a portfolio liquidation order under this section in respect of that segregated portfolio.

(2) A portfolio liquidation order may be made in respect of one or more segregated portfolios.

(3) A portfolio liquidation order is an order directing that the business and segregated portfolio assets of or attributable to a segregated portfolio shall be managed by a portfolio liquidator specified in the order for the purposes of

(a) the orderly closing down of the business of or attributable to the segregated portfolio; and

(b) the distribution of the segregated portfolio assets attributable to the segregated portfolio to those entitled to have recourse thereto.

(4) Where the Court makes a portfolio liquidation order it shall, at the same time, appoint the Official Receiver or an eligible insolvency practitioner to act as portfolio liquidator under the portfolio liquidation order.

(5) For the purposes of subsection (4), “eligible insolvency practitioner” has the meaning specified in the Insolvency Act, subject to such modifications as are necessary.

(6) A portfolio liquidation order

(a) shall not be made if a liquidator is appointed in respect of the segregated portfolio company; and

(b) shall cease to be of effect upon the appointment of a liquidator in respect of the segregated portfolio company, but without prejudice to the prior acts of the portfolio liquidator or his agents.

(7) The members of a segregated portfolio company shall not pass a resolution to appoint a liquidator of the company, whether under Part XII or under the Insolvency Act if any segregated portfolio is subject to a portfolio liquidation order without the prior leave of the Court.

(8) Any resolution passed contrary to subsection (7) shall be void and of no effect.

(9) Sections 483 to 485 of the Insolvency Act apply to a portfolio liquidation order.

153. (1) An application for a portfolio liquidation order in respect of a segregated portfolio of a segregated portfolio company may be made by

(a) the company;

(b) the directors of the company;

(c) any creditor of the company in respect of that segregated portfolio;

(d) any holder of segregated portfolio shares in respect of that segregated portfolio; or

(e) the Commission.

(2) Notice of an application to the Court for a portfolio liquidation order in respect of a segregated portfolio of a segregated portfolio company shall be served upon

(a) the company,

(b) the Commission, and

(c) such other persons, if any, as the Court may direct, each of whom shall be given an opportunity of making representations to the Court before the order is made.

(3) The Court, on hearing an application

(a) for a portfolio liquidation order, or

(b) for leave, pursuant to section 152(7), to pass a resolution appointing a liquidator, may, instead of making the order sought or dismissing the application, make an interim order or adjourn the hearing, conditionally or unconditionally.

(4) The Court may make a portfolio liquidation order subject to such terms and conditions as it considers appropriate.

154. (1) The portfolio liquidator of a portfolio of a segregated portfolio company

(a) may do all such things as may be necessary for the purposes set out in section 152(3); and

(b) shall have all the functions and powers of the directors in respect of the business and segregated portfolio assets of, or attributable to, the segregated portfolio.

(2) The portfolio liquidator may at any time apply to the Court

(a) for directions as to the extent or exercise of any function or power;

(b) for the portfolio liquidation order to be discharged or varied; or

(c) for an order as to any matter arising in the course of the liquidation of the portfolio.

(3) In exercising his functions and powers the portfolio liquidator shall be deemed to act as agent of the segregated portfolio company, and shall not incur personal liability except to the extent that he is fraudulent, reckless, negligent, or acts in bad faith.

(4) Any person dealing with the portfolio liquidator in good faith is not concerned to inquire whether the portfolio liquidator is acting within his powers.

(5) When an application has been made for, and during the period of operation of, a portfolio liquidation order,

(a) no proceedings may be instituted or continued by or against the segregated portfolio company in relation to the segregated portfolio in respect of which the portfolio liquidation order was made; and

(b) no steps may be taken to enforce any security or in the execution of legal process in respect of the business or segregated portfolio assets of, or attributable to, the segregated portfolio in respect of which the portfolio liquidation order was made, except by leave of the Court, which may be conditional or unconditional.

(6) During the period of operation of a portfolio liquidation order,

(a) the powers, functions and duties of the directors in respect of the business of, or attributable to, and the segregated portfolio assets of or attributable to, the segregated portfolio in respect of which the order was made continue to the extent specified in this Part or in Regulations made under section 159 or to the extent that the portfolio liquidator or the Court shall direct; and

(b) the portfolio liquidator of the segregated portfolio shall be entitled to be present at all meetings of the segregated portfolio and to vote at such meetings, as if he were a director of the segregated portfolio company, in respect of the general assets of the company, unless there are no creditors in respect of that segregated portfolio entitled to have recourse to the company’s general assets.

155. (1) Subject to subsection (2) and to any agreement between the segregated portfolio company and any creditor of the company as to the subordination of the debts due to that creditor or to the debts due to the company’s other creditors, the portfolio liquidator of a segregated portfolio shall, in the winding up of the business of that segregated portfolio, apply the segregated portfolio assets in satisfaction of the company's liabilities attributable to that segregated portfolio pari passu.

(2) Creditors of a segregated portfolio that is subject to a portfolio liquidation order shall be regarded as preferential creditors of the segregated portfolio to the extent that they would be preferential creditors under the Insolvency Act if

(a) the segregated portfolio was a company; and

(b) the portfolio liquidator was an Insolvency Act liquidator.

(3) Subject to the memorandum or articles, any surplus shall be distributed among the holders of the segregated portfolio shares or the persons otherwise entitled to the surplus, in each case according to their respective rights and interests in or against the company.

(4) Where there are no segregated portfolio shares and no persons otherwise entitled to the surplus, any surplus shall be paid to the segregated portfolio company and shall become a general asset of the company.

156. (1) The Court shall not discharge a portfolio liquidation order unless it appears to the Court that the purpose for which the order was made has been achieved or substantially achieved or is incapable of achievement.

(2) Subject to subsection (1), the Court, on hearing an application for the discharge or variation of a portfolio liquidation order, may make such order as it considers appropriate, may dismiss the application, may make any interim order or may adjourn the hearing, conditionally or unconditionally.

(3) Upon the Court discharging a portfolio liquidation order in respect of a segregated portfolio on the ground that the purpose for which the order was made has been achieved or substantially achieved, the Court may direct that any payment made by the portfolio liquidator to any creditor of the company in respect of that segregated portfolio shall be deemed full satisfaction of the liabilities of the company to that creditor in respect of that segregated portfolio, and the creditor’s claims against the company in respect of that segregated portfolio shall be thereby deemed extinguished.

(4) Nothing in subsection (3) shall operate so as to affect or extinguish any right or remedy of a creditor against any other person, including any surety of the segregated portfolio company.

(5) The Court may, upon discharging a portfolio liquidation order in respect of a segregated portfolio of a segregated portfolio company, direct that the segregated portfolio shall be dissolved on such date as the Court may specify.

(6) When a segregated portfolio of a segregated portfolio company has been dissolved under subsection (5), the company may not undertake business or incur liabilities in respect of that segregated portfolio.

157. The remuneration of a portfolio liquidator shall be fixed by the Court applying the general principles specified in section 432 of the Insolvency Act and shall be payable, in priority to all other claims, from

(a) the segregated portfolio assets attributable to the segregated portfolio in respect of which the portfolio liquidator was appointed; and

(b) to the extent that these may be insufficient, from the general assets of the company;

but not from any of the segregated portfolio assets attributable to any other segregated portfolio.

158. (1) In this section, a “relevant segregated portfolio company” is a company in respect of which the Court would have the power to make an administration order under Part III of the Insolvency Act if it was satisfied, in respect of that company, as to the matters specified in section 77(1)(a) of that Act.

(2) Application may be made to the Court for an administration order in respect of a segregated portfolio of a relevant segregated portfolio company.

(3) Part III of the Insolvency Act applies to

(a) an application made under subsection (2); and

(b) if the Court makes an administration order, to the administration of the segregated portfolio;

subject to any Regulations made under section 159(2)(c) and subject to such other modifications as are necessary to give effect to Part III of the Insolvency Act with respect to the administration of a segregated portfolio.