Provisional Liquidation In Bermuda And The Selection Of Provisional Liquidators

First published in Corporate Live Wire, Bankruptcy & Restructuring - Expert Guide, November 2021

In the absence of a formal equivalent to English administration proceedings or U.S. Chapter 11 proceedings, Bermuda has developed its own unique restructuring regime through the use of provisional liquidation.

For more than 20 years, it has been recognised that the winding up provisions of Bermuda's Companies Act 1981 and Companies (Winding-Up) Rules 1982 empower the Supreme Court of Bermuda to appoint provisional liquidators with powers limited to implementing a restructuring rather than displacing management altogether pending a winding-up of the company. Historically, provisional liquidation was used for a different purpose, namely, to displace management where there was a justifiable fear of a company's assets being dissipated pending the making of a winding up order.