BVI Commercial Court declines to exercise its insolvency jurisdiction in relation to wind up of Swiss company

Mourant Ozannes has successfully acted for DP Holdings in relation to a winding up petition filed by KMG International NV, in a recent decision which dealt with the way a Court chooses the most appropriate jurisdiction in which to wind up a foreign company.

In KMG International NV v DP Holding SA (Claim No. BVIHC (COM) 144 of 2016, 10 May 2017), the BVI Commercial Court declined to exercise its insolvency jurisdiction in relation to the Swiss respondent company. 

The Court found that a Swiss liquidator would be able to cause the company to vote its shares in its BVI subsidiaries to change their boards of directors and the newly appointed boards could then realise the assets of the BVI subsidiaries and arrange appropriate distributions of the proceeds to the Swiss company. As it would be the Swiss company voting its shares in its BVI subsidiaries and not a Swiss liquidator exercising his powers, it would not be necessary for a Swiss liquidator to seek recognition and the active assistance of a BVI court to vote the shares.  That being the case, the Court found that Switzerland would be the more appropriate forum for any insolvency proceedings. 

Mourant Ozannes Partner, Eleanor Morgan, said: "This judgment demonstrates that the existence of assets within the jurisdiction, such as shares in a BVI company, will not, of itself, always be sufficient to engage the court's jurisdiction under section 163 of the Insolvency Act, 2003 to appoint liquidators over a foreign company. A BVI court will always consider whether there is a more appropriate jurisdiction in which to wind up the foreign company.  The starting point will usually be that the most appropriate jurisdiction in which to wind up a foreign company is the country in which it is incorporated."

The Mourant Ozannes team was led by partner Eleanor Morgan with Senior Associate Shane Donovan, who instructed Stephen Moverley Smith QC of XXIV Old Buildings on behalf of the successful respondent.