BVI court sanctions the pooling of three concurrent liquidations in the first reported decision of its kind
03 February 2020
In a recent decision1, Justice Adrian Jack of the BVI High Court sanctioned the pooling of concurrent liquidations. This is the first reported decision of its kind in the BVI.
A number of applications were made by the liquidators of three BVI companies, including an application for the notional pooling of the estates of the three companies for the purposes of (i) payment of the liquidators' fees and expenses; (ii) reporting obligations; and (iii) distributions.
The only creditors of all three companies was the municipality of São Paulo and the state of Brazil. This was because the underlying claims were for the recoveries of bribes and kick-backs taken at the expense of the municipality by Paulo Salim Maluf (the mayor of São Paulo at the material time) and his son. These monies were laundered through all three companies.
Justice Jack opined that analysing the movement of monies between each of the three companies was likely to be a time consuming exercise that would have no practical advantage given that the creditors of all three companies were the same and it was a matter of indifference to the companies from which company a distribution came from.
Justice Jack concluded that these were appropriate circumstances to make a pooling order and held that he had such power under the powers accorded to the liquidators (which mirror the powers set out in Schedule 2 of the Insolvency Act 2003 (Act).
Similar pooling orders have been made by the courts in other offshore jurisdictions and this decision brings welcome clarity on the availability of pooling orders to the liquidators of BVI companies.
1 Matthew Richardson and Kevin Hellard (As Joint Liquidators of Durant International Corp, Kildare Finance Ltd and MacDoel Investment Ltd, all in Liquidation) BVIHCM (COM) 2017/134, 2017/135, 2019/0020.