Vol 11 (2014) - Issue 2

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Recognition and Assistance for Foreign Office Holders in Bermuda, BVI and Cayman

The offshore world has seen an increase in insolvency matters raising cross-border issues together with a clear trend of judicial inventiveness. Such a position has produced a fertile background in the leading offshore jurisdictions to test the limitations of the desire to assist foreign liquidators and the extent to which the guidance set out by UNICTRAL Model Law on Cross Border Insolvency (the 'Model Law') will be followed.
This article specifically considers the position in Bermuda, BVI and Cayman. None of these jurisdictions has adopted the Model Law, yet by the very nature of the business that they attract, a large number of the insolvency matters that arise involve cross-border issues. As a result, each has developed increasingly effective, yet different, means to achieve, in the interests of comity, much of what the Model Law is designed to produce.

Bermuda
Despite the adoption of the Model Law in other jurisdictions, Bermuda has not sought to follow suit with any statutory implementation. Instead, it has looked to the common law for resolution on cross border insolvency matters and indicators as to how closely Bermuda common law will reflect the Model Law. Despite this, a firm indicator of the Court’s approach to the Model Law came in the case of Re Founding Partners Global Fund Ltd [2011] in which Kawaley J. (as he then was) seemingly accepted the proposition that 'the Court’s common law discretion to cooperate with foreign insolvency courts should be informed by the UNCITRAL Model Law as evidence of the rules of international best practice in this regard'.
Broadly, the Bermuda Court has used its discretion to adopt an accommodating approach on cross-border insolvency issues, falling in line with the English-based common law and focusing on a single insolvency proceeding, be it domestic or foreign, in respect of which the court will allow recognition and assistance to the representative. Indeed, a flurry of Bermuda case law on the matter in 2009/2010 left no doubt that, as a matter of common law, the Supreme Court of Bermuda will usually recognise liquidators appointed by the Court of a company’s domicile and the effects of a winding-up order made by that Court. The principles applied to this common law recognition approach have usefully included recognition within common law of the statutory developments in other jurisdictions where express grounds for recognition and assistance have been enacted. The 2010 case of Kingate Global took the approach of the Bermuda Court a step further in holding that the Courts had jurisdiction to wind up foreign, overseas companies that are not registered under the Companies Act 1981 in ancillary liquidations. The stated criteria being that such companies have been carrying on business in or from Bermuda (as was the case here).