Voidable Transactions – BVI Companies

Many businesses are currently experiencing unprecedented pressure on their cash flow as a result of the COVID-19 pandemic and the governmental restrictions which are being implemented around the world. It is very important therefore that directors of British Virgin Islands (BVI) companies which may be approaching insolvency take steps to evaluate the position of the company with a view to avoiding personal liability. A director can be personally liable if such director fails to take appropriate steps to commence formal liquidation where there is no reasonable prospect of the company avoiding insolvent liquidation.

Part VII of the Insolvency Act, 2003 (the "Act") sets out the circumstances under which the High Court of the BVI may make an order setting aside a transaction or disposition of property in whole or in part. ¹ For these purposes, a company is regarded as being insolvent if: