Vol 20 (2023) - Issue 5

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A Little More Time: The BVI Court Clarifies When and How It Will Exercise Its Discretion to Adjourn an Application to Appoint Liquidators

Synopsis
Emerging from the COVID-19 pandemic, inflationary pressures and increasing interest rates have continued to have a negative impact on the global economy.
This has caused a significant increase in the number of creditor applications seeking to appoint liquidators over BVI companies on the basis that they are unable to pay their debts as they fall due.
It is well-settled that if a creditor wants to have a company wound up, and the court is satisfied that the company is unable to pay its debts, an order for the appointment of liquidators will follow unless there is some special reason why it should not. The case law principally addresses whether companies should be put into liquidation or not (and in most cases, the focus is one whether or not there is a genuine dispute as to whether the debt is due and payable), but there is little authority as to the intermediate question of adjournment where a debtor is working to pay an undisputed debt and requires a further period of time in which to do so.
The Court has a discretion to adjourn the hearing of an application for an order appointing liquidators.
That discretion is an unfettered one 2 but the burden to show why the order appointing liquidators should not be made3 rests on the company.
A recent (unreported) BVI decision has given a welcome insight into the factors that the Court will consider in exercising its discretion to adjourn the hearing of an application to appoint liquidators, including the impact on other creditors.