Knowledge

This Privy Council case concerned the interpretation of a "person aggrieved" under section 273 of the BVI Insolvency Act, 2003

The case revolved around a dispute concerning the insolvency and liquidation of Barrington Capital Group Ltd in the BVI. The appeal, stemming from earlier rulings by the Eastern Caribbean Court of Appeal, centred on whether Mr Stevanovich, a former director of the company, had legal standing to challenge the admission of a debt claim by a US trustee under the BVI Insolvency Act, 2003. This case raises significant questions about the interpretation of "person aggrieved" in insolvency proceedings and highlights the complexities of liquidators' powers.

By way of background, Barrington Capital Group Ltd became embroiled in legal issues following the fraudulent activities of a US company, Petters Company Inc., resulting in significant financial claims against it. After a series of legal actions, the US trustee submitted a claim for $424.4 million, later admitted by the liquidators, which led to the company's insolvency. Mr Stevanovich sought to contest this admission, arguing that it was improper and asserting that his rights were directly affected by the liquidators' decision, as it precipitated the insolvency and subsequent legal proceedings against him.

The lower courts ruled against Mr Stevanovich, determining that he lacked standing under section 273 of the Insolvency Act, 2003, as he was neither a creditor nor a contributory with a direct interest in the liquidation. They emphasised that standing must be established based on a genuine connection to the liquidation process. The courts also noted that Mr Stevanovich could challenge the claim's admissibility within the ongoing main proceedings, where his legal interests were being adequately represented.

Conclusion

The Privy Council ultimately upheld the decisions of the lower courts, affirming Mr Stevanovich's lack of standing to challenge the liquidators' admission of the claim. The ruling clarifies the interpretation of "person aggrieved" within the context of insolvency law, emphasising a stringent requirement for demonstrating a direct interest in the matter at hand. As a result, the appeal was dismissed, leaving Mr Stevanovich to pursue his defence in the main proceedings, rather than through separate challenges to the liquidators' decisions.

Key takeaways

This case holds broader implications for the understanding of standing in insolvency cases. The Privy Council's ruling underscores the necessity for an applicant to demonstrate a legitimate interest directly affected by the liquidators' actions, as established in previous rulings. It illustrates the limitations imposed on who can challenge decisions made by liquidators, reinforcing that only those with a direct stake in the insolvency process should have the right to dispute such decisions.