- with readers working within the Accounting & Consultancy and Banking & Credit industries
In the recent judgment in Wang Wenwei v SPQR Limited Partnership, the BVI Commercial Court considered the novel issue of whether the Court has power to appoint provisional liquidators over a BVI Limited Partnership under the Limited Partnerships Act 2017.
The Court emphatically concluded that it had no such power – a provisional liquidator is a creature of statute and absent an express power in legislation, such as that contained in s. 170 of the Insolvency Act, the Court cannot appoint a provisional liquidator over a limited partnership.
The Court also noted that even if jurisdiction had been established, the threshold for the appointment of provisional liquidators had not been met in the case.
For the appointment of provisional liquidators, it must be established that
i) it is likely that liquidators will be appointed; and
ii) the appointment of provisional liquidators is necessary to maintain the value of assets owned or managed.
The Court noted that on the first requirement, a determination of the likelihood of the appointment of liquidators would require the Court to assess matters which were within the scope of an arbitration agreement and subject to extant arbitration. The Court declined to do so ‘even in a preliminary way’ and noted that such restraint was consistent with the BVI’s pro-arbitration policy. As to the second requirement, necessity was simply not made out.
This case serves as a reminder to BVI legal practitioners that the appointment of provisional liquidators is an intrusive and draconian remedy which will not be granted lightly. This case also emphasises the importance of the underlying factual matrix in support of any application to the Court. Finally, it is a reminder of the respect accorded to arbitration agreements by the BVI Courts.
The full decision can be found here: Wang Wenwei v SPQR Limited Partnership Judgment
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