Overview

The British Virgin Islands (BVI) continues to retain its status as one of the most significant jurisdictions in the international corporate service sector and, in particular, the insolvency and restructuring sector. Throughout 2024 and into 2025, the BVI has proved to be a resilient and agile jurisdiction, at the forefront of emerging insolvency and restructuring practices, including relating to real estate and crypto-assets.

Trends

Market analysis – FSC statistics

In 2025, the BVI has remained one of the most significant international jurisdictions for company incorporations. The BVI Financial Services Commission (FSC) reports that, as of 30 June 2025, 355,024 active business companies are registered within the BVI. 7,037 business companies were incorporated within Q2 2025 – a 2.52% increase compared to 2024, and a 0.95% increase compared to Q1 2025. 2,677 active limited partnerships are registered in the jurisdiction, an 8.5% increase compared to 2024. 31 insolvency practitioners are currently registered in the BVI.

Insolvency

During 2025, the traditional insolvency market has remained flat, and the number of court-appointed liquidators has not significantly increased. This may be due to the increasing numbers of restructurings involving BVI companies and the rise of distressed directorships. Many insolvency practitioners in the BVI now offer a distressed directorship service to assist companies in navigating through times of financial hardship, or that are put in place following the appointment of receivers over the affairs of a BVI company.

Insolvencies relating to crypto-asset funds and exchanges continue to dominate the BVI insolvency landscape in 2025, with the Three Arrows Capital insolvency entering another year. The fund has made interim distributions to its creditors, but certain aggrieved parties have sought to challenge decisions of the liquidators of the fund pursuant to Section 273 of the Insolvency Act. The outcome of that application could have wide-ranging repercussions for investors of the main fund and its feeder funds, and will therefore attract interest internationally.

In addition to Three Arrows Capital, the BVI company that was previously the main operating company of the Bybit exchange was placed into liquidation at the end of 2024, and several applications have been before the court in 2025. The exchange’s operations transferred to the Seychelles approximately five years ago, and has left purported creditors of the BVI entity seeking to recover its losses from the Seychelles operating company. The exchange is one of the largest in the world, and the insolvency of the previous operating company represents a conflict between a small number of creditors seeking recompense from the BVI entity and its successor. The creditors seek the return of all assets held by the Seychelles entity, but dragging the exchange into an insolvent estate could have serious repercussions for the users of the exchange and the shareholders of the Seychelles company.

Again, this is an example of the BVI being well equipped to deal with complex international crypto insolvencies, as it has a deep bench of legal practitioners, insolvency practitioners and judges that have world-leading expertise in these matters.

Restructuring

Restructurings in the BVI have continued their popularity into 2025, with the Chinese real estate market continuing to dominate this space. The Kaiser restructuring that was implemented in Hong Kong, the Cayman Islands and BVI was a success story for the jurisdiction and showed, once again, that the BVI is a leading jurisdiction for cross-border restructurings.

Fintech and crypto-assets

The BVI has been at the forefront of developing and encouraging fintech within the jurisdiction since the launch of its innovative Regulatory Sandbox in 2021. This was followed by the passing of the Virtual Assets Service Providers Act (the “VASP Act”), which came into effect on 1 February 2023. The VASP Act requires virtual assets service providers (VASPs) that fall within the regime to register with the FSC as a VASP, under one or more categories. In March 2025, the FSC announced the establishment of a VASP Advisory Committee that formalises the membership of a core group of persons from within the private sector with whom the Commission will engage on VASP issues, supported by representatives from the FSC.

The jurisdiction’s commitment to developing a robust and credible digital assets ecosystem was emphasised by representatives from the BVI government at the Fintech on the Seas conference in late June 2025. Topics of interest included tokenised funds, stablecoin issuance and institutional blockchain solutions. The BVI offers a clear regulatory advantage for the digital asset industries, and the jurisdiction continues to shape its position as the premier offshore jurisdiction for digital assets.

Developments

Expansion of grounds for appointing a liquidator

In January 2025, the BVI government passed amendments to the BVI Insolvency Act, 2003 that expanded the grounds for appointing a liquidator over a company (whether incorporated in the BVI or abroad).

The amendments to Sections 162 and 163 of the Insolvency Act now permit the FSC to apply to appoint a liquidator in circumstances where a company or a foreign company:

• has been involved in or convicted of money laundering, terrorist financing or proliferation financing;
• breaches or contravenes any enactment relating to sanctions or embargoes; or
• is otherwise engaged in an activity that the FSC considers not to be in the best interest of the BVI’s financial services industry or the public interest.

These amendments give the BVI regulators more powers to curtail companies that are or have been involved in international criminality.

Standing to challenge the decision of liquidators

The Privy Council, on appeal from the BVI Commercial Court and the Eastern Caribbean Supreme Court (Court of Appeal), recently considered the standing of an individual to challenge the decision of a liquidator. Pursuant to Section 273 of the Insolvency Act, certain categories of individuals may apply to the BVI court if they are aggrieved by the decisions or actions of liquidators.

The case involved Barrington Capital Group Ltd (BCG), a BVI company that carried on business as an investment fund. BCG advanced a series of loans to a US company, Petters Company Inc (PCI); however, it was subsequently discovered that PCI was part of a fraudulent Ponzi scheme. Chapter 11 proceedings were commenced in the USA, and a trustee was duly appointed over PCI (the “US Trustee”).

In 2009, BCG entered voluntary liquidation. In 2010, Steven Stevanovich (SS) was BCG’s sole director and duly resigned, with a corporate director being appointed to manage the liquidation. A liquidation plan was approved, and a dividend was declared and distributed to BCG’s shareholder valued at USD10.3 million. Subsequently, the US Trustee filed a complaint in Minnesota against BCG, SS and others, claiming USD3.2 billion. BCG was dissolved in January 2011. No provision was made for the US Trustee’s claims.

In 2013, the US Trustee applied to have BCG’s dissolution declared void. The BVI Commercial Court granted the application and restored BCG to liquidation under the court’s supervision. The US Trustee submitted a claim in the liquidation for USD424.4 million, which was admitted by the liquidators in the sum of USD398.5 million, causing the company to be rendered insolvent (the “Claim”).

In 2016, the liquidators brought proceedings in the BVI against SS on the basis that he engaged in fraudulent trading and misfeasance in respect of distributions made by BCG (the “Main Proceedings”).

A year after filing his defence in the Main Proceedings, SS applied under Section 273 of the BVI insolvency Act, 2003 (as revised) (the “Act”) for the reversal of the admission of the Claim on the basis that it was wrongly admitted. The Main Proceedings were stayed pending determination of the application. 

The Privy Council Board dismissed SS’s appeal, finding that he did not have standing to rely on Section 273 of the Act. This was the first case before the board concerning Section 273 of the Insolvency Act and offers important guidance to office holders and aggrieved parties.

In its judgment, the board identified that there are three categories of persons that may have standing to utilise provisions under insolvency legislation for aggrieved or dissatisfied persons to challenge decisions made by office holders. SS could not rely on the first category as he was neither a bankrupt nor a contributory, nor could he rely on the second category as he was not a creditor. Therefore, SS’s application could only be made out under the third category, which is engaged when a person’s legitimate rights or interests are directly affected by a decision taken by an office holder pursuant to powers conferred on the office holder that are peculiar to the applicable insolvency regime.

In her judgment, Dame Janice Pereira (previously the Chief Justice of the Eastern Caribbean Supreme Court) confirmed that a number of factors are to be considered when determining whether a person can utilise the third category. Dame Pereira noted that SS was a former sole director of BCG and a defendant in the Main Proceedings. Secondly, she also determined that the liquidators’ powers were peculiar to the insolvency regime, as their power to admit a claim is provided by Sections 208 to 215 of the Act. Thirdly, the board had to consider whether the decision to admit the Claim directly affected SS’s rights or interest.

SS submitted that the admission of the Claim directly affected his interest because, but for the admission of the Claim, the company would be solvent and the Main Proceedings seeking contribution from SS would not have been commenced. Therefore, reversing the admission of the Claim would inevitably discontinue the Main Proceedings. Further, that SS could defend the Main Proceedings should not negate standing under Section 273 of the Act.

The liquidators submitted that the Main Proceedings were the most appropriate forum for determining the question of admissibility of the Claim.

The board confirmed that the applicability of the third category requires specific analysis and will be fact-sensitive.

In this instance, if the Claim was inadmissible, the Main Proceedings would end. The sole connecting factor relating to SS was the existence of the Main Proceedings, and within such proceedings SS had the option of challenging the admissibility of the Claim. Therefore, SS’s interest was best described as a defendant with a contingent liability to contribute to the estate of the company in insolvency, which in turn is dependent on the validity of the liquidator’s admission of the Claim.

Consequently, the decision to admit the Claim did not directly affect SS’s rights. None of his rights or interests directly touched upon or concerned the administration of the insolvent estate. That SS could defend the admissibility of the Claim in the Main Proceedings was a reason not to broaden the scope of the third category.

This decision brings welcome clarity to BVI insolvency law and to who may qualify as an “aggrieved person” under Section 273 of the Insolvency Act. The courts will be reluctant to widen the field so as to engage the third category, and careful analysis will be necessary to ensure that potential applicants meet the threshold test.

Duty of directors when a company is insolvent

The case of Byers and Richardson (as Joint Liquidators of Pioneer Freight Futures Company Limited) and Pioneer Freight Futures Company Limited (In Liquidation) v Chen Ningning has been before the BVI court and the appellate court for over a decade, and the case continues to develop the insolvency regime in the territory.

In its most recent decision, the BVI Court of Appeal reaffirmed the rule in West Mercia that directors have a common law duty to consider and give appropriate weight to the interests of the company’s creditors when they know or ought to know that the company is insolvent or bordering on insolvency.

The Court of Appeal reiterated the long-held rule that, once a company is insolvent or of questionable solvency, any loss to the general body of creditors is equated with that of the company.

The court determined that when a payment is made by an insolvent company to one of its creditors, in preference to other creditors, the company would suffer a pecuniary loss equivalent to the financial loss suffered by the general body of creditors. Therefore, a director or shadow director may not be able to avoid reimbursing the company, even in circumstances where the payment in question was balance sheet-neutral. If this were not the case, directors would be encouraged to breach their creditor duty on the false premise that a transaction that is balance sheet-neutral causes a company no financial loss.