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Update on Standing to Challenge Decisions of BVI Liquidators

In our last update we commented on the tests applied by the BVI Courts when considering both the standing to challenge the decisions of BVI Liquidators and whether those decisions should be overturned.  We stated that the Court’s view was that s273 requires the person aggrieved to be a contributory, a creditor or a narrow class of persons directly affected by the exercise of a power specifically given to liquidators, who would not otherwise have the right to challenge the exercise of that power. This article provides an update on the Court’s approach to the question of standing to challenge liquidators decisions by looking at the judgement of Judge Wallbank in Stevanovich v Wide & McDonald in which liquidators from GT were involved [ 901 kb ].

In this case a former director of the company in liquidation challenged the decision of the liquidators to admit a creditor claim.  Only 1 creditor claim was admitted in the liquidation.  Following the admission of the creditor claim the liquidators brought proceedings against the former director.  The former director argued that but for the admission of the claim proceedings would not have been brought against him and therefore he was ‘directly affected’ by the decision of the liquidators to admit the claim. 

The Court held that as an outsider to the liquidation it cannot matter to him whether a creditors claim was admitted in the liquidation or not.  The Court analysed the meaning of directly affected and stated that whilst in this case the former director was ‘indirectly affected’ by the liquidators decision to admit the claim that he was not directly affected.  The Court further commented that the requirement for a person to be affected ‘directly’ is co-extensive with the need for an applicant to have a legitimate interest in the relief sought. 

Grant Thornton Comment

The above analysis by the Court makes practical sense in that ‘outsiders’ to the liquidation should not be able to interfere in the administration of it.  This decision has been appealed to the Eastern Caribbean Court of Appeal and is due to be heard in the July sitting.