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Do not fill this in! ==Insolvency== {{Main article|British Virgin Islands bankruptcy law}} British Virgin Islands insolvency law is almost entirely codified in the Insolvency Act, 2003 and the Insolvency Rules, 2005.<ref>SI No 45 of 2005</ref> The Insolvency Act is "predicated heavily towards the protection of [[secured creditor]]s' rights".<ref>{{cite book|title=British Virgin Islands Commercial Law |edition=2nd |year=2012 |publisher=[[Sweet & Maxwell]] |isbn=9789626614792 |at=para 7.004}}</ref> In the British Virgin Islands a company will be deemed to be [[insolvency|insolvent]] if it [[cash flow]] insolvent, [[balance sheet]] insolvent or "technically" insolvent (i.e. it has failed to satisfy a judgment debt or statutory demand letter).<ref>Insolvency Act, section 8</ref> In each of those circumstances a creditor to petition the court for the appointment of a [[Liquidator (law)|liquidator]]. A company may also voluntarily enter insolvent liquidation by a vote approved by 75% of the votes of the company's members.<ref>Insolvency Act, section 161</ref> If a liquidator is appointed (either voluntarily or by the court), the liquidator's primary duty is to collect in all of the company's assets and then distribute them ''[[pari passu]]'' to the company's creditors.<ref>Insolvency Act, section 185</ref> The Insolvency Act confers wide powers upon the liquidator to enable him to do so. Once a liquidator is appointed, [[unsecured creditor]]s cannot commence legal proceedings against the insolvent company without the leave of the court<ref>Insolvency Act, section 175</ref> and any rights of action against the company are converted into claims in the liquidation process. [[Secured creditor]]s generally do not participate in the liquidation process, and may continue to proceed with any enforcement action directly against their collateral pursuant to a valid [[security interest]].<ref>Insolvency Act, section 175(2)</ref> A liquidator has a right to disclaim onerous property and unprofitable contracts (although this cannot destroy or remove any third party rights once they have vested).<ref>Insolvency Act, section 217</ref> British Virgin Islands law only provides for a very small class of [[preferential creditor]], and these are rarely commercially significant in insolvent liquidations.<ref>Insolvency Rules, schedule 2</ref> When a company goes into insolvent liquidation, any mutual debts between the company and a creditor intending to prove in the liquidation will be [[Set-off (law)|set-off]].<ref>Insolvency Act, section 150</ref> However, the right of set-off is not mandatory, and can be waived by a creditor provided this does not prejudice other creditors. Any creditor who extended credit to the company at a time when it had notice of the company's insolvency (excluding balance sheet insolvency for these purposes) cannot set-off. The Insolvency Act has incorporated [[International Swaps and Derivatives Association|ISDA]] Model Netting legislation (pre-2007 form) and so any [[Netting|netting agreement]] relating to financial contracts will prevail over the statutory insolvency set-off provisions.<ref>Insolvency Act, Part XVII</ref> A liquidator may challenge transactions entered into in the twilight period prior to insolvency where such transactions constitute either an [[unfair preference]], [[undervalue transaction]], [[voidable floating charge]] or extortionate credit transaction.<ref>Insolvency Act, Part VII</ref> A liquidator can also pursue former directors (including shadow or de facto directors) and officers of the company for either misfeasance or [[insolvent trading]].<ref>Insolvency Act, Part VIII</ref> The Insolvency Act also regulates [[receivership]]s, including [[administrative receivership]]s. Under British Virgin Islands law it is possible to appoint an administrative receiver pursuant to a [[floating charge]] over all or substantially all of a company's assets and undertaking. The insolvency regime in the British Virgin Islands does not really provide for any form of [[debtor in possession]] rehabilitation. Although the Insolvency Act also makes provision for [[administration (law)|administration orders]], these provisions have not yet been brought into force. It is also possible for an insolvent company to enter into a creditor's arrangement under a supervisor, and thereby restructure the company's debts. Such arrangements cannot affect the rights of secured creditors or preferential creditors without their consent, and require the consent of 75% of creditors by value and a majority in number. In order to act as a liquidator in an insolvent liquidation, administrative receiver (but not a simple receiver), supervisor of an arrangement or administrator (if administration is ever brought into force) a person must be a licensed insolvency practitioner.<ref>Insolvency Act, section 474</ref> A practitioner must be resident in the British Virgin Islands to obtain a licence. However, it is possible for a foreign insolvency practitioner to be appointed jointly with the British Virgin Islands resident licensed insolvency practitioner. Summary: Please note that all contributions to Christianpedia may be edited, altered, or removed by other contributors. If you do not want your writing to be edited mercilessly, then do not submit it here. You are also promising us that you wrote this yourself, or copied it from a public domain or similar free resource (see Christianpedia:Copyrights for details). Do not submit copyrighted work without permission! 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