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unfair preference or a voidable floating charge the transaction must be an “insolvency transaction” (which is defined to
be a transaction that is entered into at a time when the BVI Company was insolvent or it causes the BVI Company to
become insolvent), that it is entered into within the vulnerability period and otherwise amounts to an undervalue
transaction, an unfair preference or a voidable floating charge within the meaning of the Insolvency Act, 2003. For a
transaction to amount to an extortionate credit transaction it must be entered into within the vulnerability period and
otherwise amount to an extortionate credit transaction within the meaning of the Insolvency Act, 2003. For these
purposes, an “undervalue transaction” would include a sale, transfer, lease, exchange or other disposition of property or
any transaction contemplated thereby which is a gift or made for no consideration or for consideration the value of
which, in money or money’s worth, is significantly less than the value, in money or money’s worth, of the consideration
provided by the BVI Company. An “unfair preference” includes a transaction which has the effect of putting a creditor of
the BVI Company into a position which, in the event of the BVI Company going into insolvent liquidation, will be better
than the position it would have been in if the transaction had not been entered into. An “extortionate credit transaction”
includes a transaction relating to the provision of credit to the BVI Company, having regard to the risk accepted by the
person providing the credit, the terms of which are such as to require grossly exorbitant payments to be made (whether
unconditionally or in certain contingencies) in respect of the provision of credit, or which otherwise grossly contravenes
ordinary principles of fair trading. Furthermore, a conveyance of property (which includes a mortgage or charge made by
a company) by the BVI Company at any time with intent to defraud creditors is voidable at the instance of the person
thereby prejudiced.
If a transaction is determined by the BVI Court to be a voidable transaction then there are a number of possible remedies
that may be ordered. In particular, the BVI court may, for example, order that the obligations of the BVI Company under
any guarantee or security granted by the BVI Company may be set-aside, and or any payments made as a consequence of
the voidable transaction could be clawed back by a liquidator of the BVI Company.
Although the Insolvency Act, 2003 contains provisions which are similar to the English administration process, those
provisions have not been brought into effect and, as such, administration is not currently an option under BVI law.
Kuwait
Insolvency Overview
Law No. 68/1980, enacting the Commercial Code (the "Commercial Code") governs bankruptcy matters. In the event of
the Guarantor's insolvency, bankruptcy proceedings may be initiated in Kuwait and the Commercial Code will apply.
Under the Commercial Code, a Kuwaiti company whose financial business is disrupted and suspends payment of its
commercial debts may be adjudged bankrupt by the Kuwait Court of First Instance (the “Court”), pursuant to the filing
of a petition of bankruptcy (in accordance with the prescribed method for initiation of such suits) by a creditor of the
company or by the shareholders of the company. The Court may also adjudicate a company bankrupt of its own accord
or at the request of the public prosecutor.
The hearing of bankruptcy cases is done on an expedited basis and any judgment issued in this regard will be enforceable
immediately unless otherwise provided for in the judgment. The time limit for appeal is 15 days from the date of the
judgment.
Where, before the adjudication of bankruptcy becomes final and all appeals have been exhausted, the company is able to
pay off all its civil and commercial debts the Court must issue a judgment annulling the adjudication.
Consequences of Adjudication of Bankruptcy
Immediately upon being declared bankrupt the company would be prohibited from managing and disposing of its assets.
This prohibition extends to all property owned by it at the date of the adjudication as well as to any property which
devolves to it during its bankruptcy. It may not pay any debts due nor collect any amounts owed to it. All of its
obligations, whether secured or unsecured, become immediately due and payable in cash. Any of its debts which are in a
foreign currency must be converted into Kuwaiti Dinars, the official currency of the State of Kuwait, at the official
exchange rate prevailing on the date of the order.
No cases can be initiated by or against a company after being declared bankrupt, except criminal cases and other cases
relevant to the administration of the bankruptcy.
