insolvency

Who is caught

These instruments govern corporate and personal insolvency in the Virgin Islands, centred on the Insolvency Act (Revised Edition 2020) and its Rules, the licensing of insolvency practitioners, and the liquidation and dissolution of companies and limited partnerships under the BVI Business Companies Act and the Limited Partnership Act. They reach both the office-holders who conduct insolvency work and the entities that become subject to liquidation, receivership, administration or bankruptcy.

• Insolvency practitioners: Individuals seeking or holding a licence to act as an insolvency practitioner, their firms and employees, and overseas practitioners proposed for appointment.
• Voluntary liquidators: Individuals appointed or seeking appointment as voluntary liquidators of BVI business companies and limited partnerships.
• Companies and partnerships: BVI business companies (solvent and insolvent), foreign companies, limited partnerships, and companies being struck off or dissolved.
• Regulated persons and banks: Regulated persons under the Insolvency Act and licensees, with banks subject to a distinct regime involving the Virgin Islands Deposit Insurance Corporation (VIDIC).
• Office-holders and directors: Liquidators, administrators, administrative receivers, receivers, the Official Receiver, and directors of insolvent companies whose conduct is assessed.
• Creditors: Creditors submitting proofs of claim in a liquidation.

Several amending Acts (the Insolvency (Amendment) Acts 2022 and 2024 and related rules) integrate VIDIC into the insolvency of banks and broaden the grounds on which the Financial Services Commission may seek a liquidator. The Insolvency (Amendment) Act, 2024 came into force on 2 January 2025; several other amending instruments take effect on dates to be appointed by the Minister by Gazette notice.

Sources: Striking off and Liquidation of Companies Under the BVI Business Companies Act, User Guides No. 5 · Insolvency Rules 2005, Form 147(3) - Advertisement of Administrative Receiver's Report · Insolvency Rules 2005 - Form R184 (Claim Form) · Insolvency Rules 2005 Form 482(1)A (Consent to Act) · Insolvency Rules 2005 - Form 482(1)(b) Consent to Act · Application for a Licence to Act as an Insolvency Practitioner (Revised) · Form 276(1) - Notice Requiring Preparation and Submission of Statement of Affairs (Insolvency Rules 2005) · Form 271 - Report on Directors' Conduct (Insolvency Act, 2003, Section 271) · BVI Business Companies Regulations (Revised 2020) · Limited Partnership (Amendment) Regulations, 2024 · Insolvency (Amendment) Act, 2022 · Insolvency (Amendment) Act, 2024 · Insolvency (Amendment) Rules, 2023 · Insolvency (Transitional Provisions) Regulations, 2004 · Insolvency Practitioners (Amendment) Regulations, 2020 · Insolvency Practitioners Regulations (Revised 2020) · Insolvency (Amendment) Act, 2024 (Commencement) Notice, SI No. 78 of 2024

Key duties

Insolvency practitioner licensing

• Licence application: Apply to the Commission on the prescribed form with a non-refundable $300 application fee, evidence of entitlement to work in the Virgin Islands, a curriculum vitae, and firm confirmation of minimum security including insurance.
• Residency: Licence holders must be resident in the Virgin Islands; the Commission treats an applicant as resident on the basis of belonger status, a certificate of residence, or habitual lawful residence, and temporary absences must not exceed 180 days in any year after licensing.
• Security: Maintain professional indemnity insurance of at least 5,000 dollars per claim and in aggregate annually; the Commission may require more.
• Fees: Pay an annual fee of $3,000 or $1,500 (by licence type) by 31 March each year, with a late payment penalty equal to the fee amount; collect the licence within 3 months of approval.
• Record-keeping: Maintain records and case files for each appointment, notify the Commission of the address where records are kept, and retain them for at least 6 years after the appointment ends.
• Notifications: Notify the Commission in writing within 10 days of any matter affecting fitness and propriety, eligibility, or changes to name, address, business details or records location.
• Continuing education: Complete at least 30 hours of relevant CPE annually, including 10 structured hours unless waived, and submit an annual return when licence fees fall due.

Voluntary liquidators

• Residency: A voluntary liquidator of a company or limited partnership must have been physically resident in the Virgin Islands for at least 180 days before appointment, subject to a joint-liquidator exception and grandfathering for existing appointments.
• Eligibility: Meet the revised qualification criteria, including at least 2 years liquidation experience, professional competence, an insolvency practitioner licence or equivalent qualification, and knowledge of relevant financial services legislation; a voluntary liquidator must not be a disqualified person.
• Liquidation records: Collect records relevant to compliance with the specified sections of the Act, plus any further records the Commission requires, and at conclusion transmit copies to the registered agent (who must retain them for at least 5 years).
• Solvency documents: For solvent voluntary liquidation, directors must make a declaration of solvency no more than 4 weeks before, and approve a liquidation plan no more than 6 weeks before, the appointment resolution; a company regulated by the Commission needs the Commission's consent to appoint a voluntary liquidator.
• Insolvency discovered mid-liquidation: If a voluntary liquidator forms the opinion the company is insolvent, he must notify the Official Receiver and convene a creditors' meeting to appoint a licensed insolvency practitioner.

Regulated persons and banks

• Notice before appointment: Members of a regulated company must give at least 5 business days written notice before appointing a liquidator by resolution, to VIDIC for banks and to the Commission for other regulated persons, unless a shorter period is accepted in writing.
• Reporting: Liquidators of regulated persons must send the Commission (and where relevant the International Tax Authority or VIDIC) copies of the final report and statement of realisations and distributions, and notice of liquidation must be given to the Commission.
• Bank liquidation notices: Where a company in liquidation is a regulated person that is a bank, required notices and documents must also be sent to VIDIC in addition to the Commission.
• Financial distress: A licensee that forms the opinion it shows early indicators of financial distress must forthwith notify the Commission (and, for banks, VIDIC) and initiate recovery plans.

Insolvency proceeding filings

• Director conduct report: An office-holder must submit Form 271 to the Official Receiver assessing whether any director's conduct makes them unfit, keeping the report confidential.
• Statement of affairs: An office-holder may require a connected person to prepare and submit a statement of affairs by a stated deadline; non-compliance may attract a fine and daily default fine.
• Consent to act: An insolvency practitioner must certify authorisation under Part XX of the Act, with consent valid for a period not exceeding six weeks.
• Notice of release: A released liquidator must file the prescribed notice with the Registrar with an office copy of the court order attached.
• Completion and dissolution: On filing the liquidator's final report and statement, the Registrar publishes Gazette notice of completion and intention to strike off, specifying a date not less than 7 days after publication, after which the company is dissolved.

Sources: Striking off and Liquidation of Companies Under the BVI Business Companies Act, User Guides No. 5 · Insolvency Rules 2005, Form 147(3) - Advertisement of Administrative Receiver's Report · Insolvency Rules 2005 Form 482(1)A (Consent to Act) · Insolvency Rules 2005 - Form 482(1)(b) Consent to Act · Application for a Licence to Act as an Insolvency Practitioner (Revised) · Insolvency Rules 2005 Form 235(7) - Notice of Release of Liquidator · Form 276(1) - Notice Requiring Preparation and Submission of Statement of Affairs (Insolvency Rules 2005) · Form 271 - Report on Directors' Conduct (Insolvency Act, 2003, Section 271) · BVI Business Companies (Amendment) Regulations, 2022 (SI No. 73 of 2022) · Limited Partnership (Amendment) Regulations, 2024 · Financial Services Commission (Amendment) Act, 2022 · Insolvency (Amendment) Act, 2022 · Insolvency (Amendment) Code of Practice, 2023 · Insolvency (Amendment) Rules, 2023 · Insolvency Code of Practice (Revised 2020) · Insolvency Practitioners Regulations (Revised 2020)

Exemptions and carve-outs

The instruments provide a small number of specific carve-outs and transitional savings rather than broad exemptions from the insolvency regime.

• Licensees winding down: Under the Commission's Exemption Guidelines, licensees in run-off, solvent liquidation or insolvent liquidation (across banking and trust, insurance, SIBA, financing and money services, and company management) may apply to be excused from obligations such as having an auditor, audited statements, a compliance officer, internal audit, investment manager and custodian, and prudential returns. The exemption is not automatic, must be applied for and approved, and is conditional on ongoing filings and payment of licence fees.
• Transitional provisions: Liquidations, receiverships and bankruptcy cases commenced before the Insolvency Act's 16 August 2004 commencement remain governed by the former law, and the Act's licensing requirements do not apply to a person acting under an appointment made before that date.
• Voluntary liquidator grandfathering: The 180-day residency requirement for voluntary liquidators is subject to a joint-liquidator exception and to transitional savings for liquidators already appointed before commencement.
• Confirmation not required: Under the revocation and solvent liquidation guidance, confirmation that termination is not prejudicial to investors or creditors is not required for re-domiciliation cases or where the entity never commenced regulated business.

Sources: Exemption Guidelines for Licensees in Run-off, Solvent Liquidation or Insolvent Liquidation · Guidance Notes on Revocation or Cancellation of Licences or Certificates of Regulated Persons, Including the Approval of Solvent Liquidation Procedures · Limited Partnership (Amendment) Regulations, 2024 · Insolvency (Transitional Provisions) Regulations, 2004

Enforcement and penalties

Enforcement runs along two tracks: administrative penalties and licensing sanctions against insolvency practitioners, and the Commission's court-based power to seek liquidation of companies.

• Administrative penalties: For contraventions of the Act, regulations, rules or Code of Practice, the Commission may impose a $500 penalty per contravention, increasing by 10% if unpaid within one month and by a further 50% if unpaid within two months, recoverable as a civil debt.
• Late fees: A late payment penalty equal to the annual fee amount applies where an insolvency practitioner's annual fee is unpaid.
• Licence sanctions: Complaints upheld against a licensee can result in directives, suspension or revocation of the licence, administrative penalties, publication of outcomes or cost recovery; a licence was revoked where a practitioner ceased to be resident in the Virgin Islands.
• Commission's liquidation power: The Commission may apply to court to appoint a liquidator over a company that is or was a regulated person, carried on unlicensed financial services business, was involved in money laundering, terrorist financing or proliferation financing, breached sanctions, or engaged in activity contrary to the public interest; corresponding grounds support a finding that a company is unable to pay its debts.
• Statement of affairs default: Failure to submit a required statement of affairs or to cooperate may result in a fine and, for continued default, a daily default fine, and may be considered by the court in unfitness or disqualification proceedings.
• Other enforcement tools: The Commission has used its powers to appoint examiners to determine solvency, to obtain protection orders and asset freezes with court-ordered winding up, and to apply for the appointment of joint liquidators or administrators over failing licensees.

The Financial Services Commission (Amendment) Act, 2022 also expands the regulations power to cover administrative penalties, rehabilitator functions and director or partner disqualification, but the summaries do not set out specific figures for those penalties.

Sources: Public Statement: AAUG Insurance Co Ltd. (2018-08-17) · Meridian Income Bond Limited (2004-01-06) · Appointment of Joint Liquidators - Crescent Corporate Services Limited (2016-02-22) · Appointment of Joint Liquidators - AAUG Insurance Co. Ltd. (2015-11-30) · Appointment of Examiner - Crescent Corporate Services Limited (2013-08-20) · Revocation of Licenses/Certificate - Mr. Christopher David Stride of Krys & Associates (BVI) Ltd (2011-02-11) · Form 276(1) - Notice Requiring Preparation and Submission of Statement of Affairs (Insolvency Rules 2005) · Financial Services Commission (Amendment) Act, 2022 · Insolvency (Amendment) Act, 2024 · Insolvency Practitioners Regulations (Revised 2020) · Meridian Income Bond Limited (2004-02-12)