Courtesy of William Tacon, Partner, Kroll (BVI) Limited

The financial services industry in the BVI is rapidly developing and growing in sophistication as the raft of recently introduced legislation beds down. Companies and their professional global advisers are becoming increasingly acquainted with the interesting opportunities offered by world-class legislation.

Although they may not seem to be particularly important, the Insolvency Act and Rules play a key part in the overall framework of the legislation. Given the huge number of companies registered in the BVI over many years, it's inevitable that many will reach the end of their natural lives, and need to be dealt with accordingly. In insolvent situations, it is vital for laws to give certainty and transparency to investors and creditors, while protecting the interests of all stakeholders. In cases where a solvent liquidation process is used to return funds to shareholders, efficient, effective and flexible processes greatly assist in attracting hedge and mutual funds and other entities, which have a fixed life.

There have been interesting developments recently where cases have reflected recent trends in incorporation. Many companies incorporated in the BVI are joint ventures, often owning — directly or indirectly —- valuable interests in overseas trading ventures. Given the nature of joint ventures, disputes can and do arise between the parties. The Insolvency Act can be used creatively and effectively to help resolve disputes or for an independent liquidator to take control. In cases of shareholder disputes, the court has the power to order liquidation on the "just and equitable" grounds. Effective control can also be granted through the selection of a court-appointed receiver or provisional liquidator.

These processes do not destroy value but, on the contrary, preserve it for shareholders through the liquidation process.

There are two main areas in which conflict and independence issues can arise:

• Statutory: For example, through an audit relationship and driven by the Sarbanes Oxley legislation and U.S. Securities and Exchange Commission rules.
• Perceived Independence: Where there is a pre-existing commercial relationship between one side or the other and the firm of the proposed liquidator.

Each type of conflict has to be sought out, and although the statutory conflict automatically rules out an appointment, the issue of perceived independence is just as important and often more so in the eyes of the protagonists.

Kroll (BVI) Limited is an affiliate of the worldwide Kroll network, which does not offer audit in its portfolio of services. In addition to insolvency and restructuring, Kroll's services include forensic accounting, reconstruction and management of electronic data and investigation, all of which are available at the BVI office. The Kroll team of professional staff in the BVI offer a complete service, based on William Tacon's 25 years of experience in the insolvency and restructuring business in the UK and the BVI.

Kroll (BVI) Limited
PO Box 4571, Palm Grove House Wickham’s Cay,
Road Town, Tortola, BVI
Tel: 284-494-9600
Fax: 284-494-9601
Email: william.tacon@krollbvi.com
www.krollworldwide.com
Protecting your assets and your reputation. Our core services include insolvency, corporate restructuring, litigation support, forensic and investigations. Our presence in the Eastern Caribbean as a leading provider of insolvency and restructuring service is enhanced by being art of Kroll the world’s leading risk consultancy company.

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