Voluntary Liquidations (BVI)

The BVI is home to many hundreds of thousands of companies. Some of these come to the end of their useful lives in the normal course of events and their affairs need to be resolved in an orderly manner – this is usually done by appointing a Voluntary Liquidator to deal with its affairs. Others fail as a result of changes in the economic environment, poor management or for causes beyond the control of management and in these cases they are often wound up by the court.

Our experienced team at FFP has a specialism in dealing with these problems. Most solvent liquidations are handled by existing service providers such as audit firms, affiliates of legal counsel or director firms. Although we do perform what are often referred to as “clean shell” liquidations, more often we are asked to take on entities that fall outside existing service providers’ normal risk parameters and have residual issues that require additional experience or resources. Recent examples of some of our cases include:
resolution of material FIN48 tax issues resulting in significant distributions to investors;
closure of a fund group and establishment of a liquidating entity to hold illiquid assets for the longer term;
winding down of a fund with distributions in specie and in cash to investors depending upon their wishes;
realising remaining assets during an ongoing regulatory investigation;
realisation of privately held and thinly traded securities;
resolution of disputes between a fund’s founding partners to allow subsequent distributions;
a buy out in liquidation of minority shareholders by the investment manager.

The following is a brief summary of the Voluntary Liquidation (VL) procedure. If you require any further information please do not hesitate to give us a call. Our full contact details are at the bottom of this page.

Voluntary Liquidation

This is a relatively straightforward procedure, although it is important to ensure that the Company is fully compliant with the provisions of the legislation in order to avoid any delays in bringing its life to an end.

For a company to be placed into Voluntary Liquidation it must be solvent; i.e. it must be able to pay all its debts in full.

The process is initiated by the directors and is approved by the shareholders, although in many cases the directors and shareholders are one and the same. The directors will prepare two documents – the Declaration of Solvency and the Liquidation Plan.

Declaration of Solvency

This is a declaration by all of the directors of the Company that it is able to pay all its debts in full. Attached to the Declaration of Solvency should be a list of the assets and liabilities of the Company. The figures in the Declaration of Solvency are at the most recent practical date prior to the date on which it is prepared.

Liquidation Plan

The Liquidation Plan must contain the following information:-
the reasons for placing the Company into Voluntary Liquidation;
an estimate of the timeframe within which the liquidation should be completed;
whether the Voluntary Liquidator has the power to carry on the business for the purpose of realising the assets of the Company;
the name(s) of the Voluntary Liquidator(s) and how their fees are to be paid; and
whether the Voluntary Liquidator(s) are required to send a copy of the final statement of account to all shareholders.

The Liquidation Plan must also state where the Company’s principal place of business was located. The Declaration of Solvency must be dated not more than 4 weeks prior to the date of the resolution appointing the liquidators, whilst the Liquidation Plan must not be dated more than 6 weeks before. In practice, both these documents are usually prepared at the same time, which is often when the EGM is convened for the purpose of passing the resolutions to wind up.

Who can be the Voluntary Liquidator

It is probably best to set out who cannot be a Voluntary Liquidator.
a person who has been disqualified from so acting – i.e. someone who is subject to an order or undertaking under the BVI Insolvency Act – or similar disqualification in another jurisdiction;
someone who is under 18 years of age;
an undischarged bankrupt;
a person who was a director of the Company or an affiliated company during the last two years;
someone who at any time in the last two years was in a senior management position in the Company or one if its affiliates and whose responsibilities included financial management of the Company or the affiliate; or
a close family member of someone in the two preceding paragraphs. If the Company was an entity that was regulated by the FSC, it cannot be placed into liquidation without the consent of the Commission who must also approve the identity of the Voluntary Liquidator.

Commencement of the Voluntary Liquidation

The proposed liquidators must provide a signed consent to act as Voluntary Liquidator(s). The directors must prepare the Declaration of Solvency and the Liquidation Plan, although in practice they are likely to be assisted by the proposed liquidators. The shareholders must then approve the Liquidation Plan. The liquidators are then appointed by a resolution of the shareholders, or by the directors if that is provided for in the Memorandum & Articles.

The Voluntary Liquidation is deemed to have commenced on the date on which the Voluntary Liquidator files the notice of appointment with Registrar.

A Voluntary Liquidator cannot be appointed:-

until the person(s) who are going to act as Voluntary Liquidator(s) have given their consent in writing to act as liquidators;
a Declaration of Solvency has been completed and a Liquidation Plan has been approved; or
if there is an outstanding application to the Court for the appointment of a liquidator. Within 14 days of the appointment, the Voluntary Liquidator(s) must file copies of the notice of appointment, the Declaration of Solvency and the Liquidation Plan with the Registrar.

Role of the Voluntary Liquidator

In broad terms the role of the Voluntary Liquidator(s) is to:-
get in and realise the assets;
agree the claims of creditors, if any, and pay them;
pay the surplus to the shareholders in accordance with their rights.

Conclusion of the liquidation

Once the Voluntary Liquidator(s) have completed the work of realising the assets and distributing the proceeds to creditors and shareholders in accordance with their priorities, the liquidation can be brought to an end.

The Voluntary Liquidator(s) must file a completion statement with the Registrar who will then proceed to strike the Company’s name from the Register and will issue a certificate of dissolution. On receipt of the certificate of dissolution the Voluntary Liquidator(s) must publish a notice in the BVI Official Gazette to the effect that the Company has been struck off and dissolved.

Removal of a Voluntary Liquidator

A Voluntary Liquidator can be removed if he/she was not eligible to be appointed in the first place, or removal can be by the Court if:-
the conduct of the Voluntary Liquidator has been unsatisfactory; or
the Voluntary Liquidator has a conflict of interest; or
there is some other good reason.

Illiquid asset solutions – Asset Resolution Company SPC (“ARC”)

A particular focus we have is the use of our dedicated illiquid asset platform. ARC has been used to house illiquid assets, escrow amounts, undertake restructuring transactions and assume worthless positions to allow trading books and custodian relationships to be closed out. ARC has dedicated cells, bank accounts and brokers. Frequently we find we can resolve an illiquid asset problem for a fund which allows the existing service providers to continue the solvent liquidation process. Further details can be found at www.assetresolutioncompany.com.


With recent changes to the UK Inheritance Tax treatment of residential real estate owned by corporate entities, many of the previous benefits of holding a UK property in a corporate structure (or a trust and corporate structure), commonly referred to as an “enveloped property”, have finally been eroded.  Depending on the situation, following appropriate tax advice, it may now be time to complete the de-enveloping process either by transferring a property holding company to one or more beneficiaries (if the company is currently owned by a trust) and then liquidating that company; or liquidating a property holding company owned by a trust, to move to direct trust ownership of the property   A more detailed explanation of the de-enveloping process can be found here. De-Enveloping More Info

Meanwhile, If you need more information about any of the services mentioned above please contact either  Stephen Briscoe – 1 284 494 2714 – or  Chris Rowland – 1 345 640 5857 –