Bankruptcy & Restructuring – To Enforce, Or Not To Enforce

Bermuda's flagship restructuring process is the appointment of provisional liquidators, whose powers can be tailored to meet the specific need of a particular situation. It is very common, for instance, for provisional liquidators to be empowered to promote a scheme of arrangement between an insolvent company and its creditors. The practice is now developed to the point where the Court will generally not permit an insolvent company to promote a scheme of arrangement unless provisional liquidators are appointed.

Provisional liquidation may, at least on the face of it, prove less useful where the realisable value of an insolvent company's assets is exceeded by the value of secured debt. In Bermuda, a secured creditor is permitted to enforce its security against an insolvent company, even where a winding-up petition has been presented or a winding up order made, without regard to the commencement of insolvency proceedings.