HFW Secures Landmark BVI Appeal Clarifying Directors’ Duties to Creditors in Insolvency

Global law firm HFW acted for Byers & Richardson as Joint Liquidators of Pioneer Freight Futures Company Limited in proceedings against Chen Ningning, instructing counsel Tom Smith KC (South Square Chambers) and Ben Griffiths (Erskine Chambers). The Eastern Caribbean Court of Appeal overturned the trial judge’s finding that payments made by Pioneer Freight Futures Company Limited to Zenato Investments Ltd were “balance sheet neutral” and therefore not compensable. The Court held that depletion of assets available to creditors constitutes a loss to the company even if the net asset position remains unchanged, and that balance sheet neutrality is not a defence to breach of fiduciary duty. The court reaffirmed that, once insolvency is imminent, directors become stewards of a company’s assets for the benefit of its creditors. It confirmed that equitable remedies remain available even where statutory remedies under the BVI Insolvency Act 2003 are not, and that directors will be held accountable where their actions prejudice creditors. The judgment is expected to be persuasive in other common law jurisdictions, including England & Wales, Australia, Hong Kong and Singapore. HFW represented Byers & Richardson (as Joint Liquidators of Pioneer Freight Futures Company Limited) with a team composed by: Scott Cruickshank, Partner (BVI); James Henson, Senior Associate (Hong Kong); Noel Campbell, Consultant (Hong Kong); Rick Brown, Partner (London). HFW also instructed Tom Smith KC (South Square Chambers) and Ben Griffiths (Erskine Chambers) to represent Byers and Richardson in the proceedings. HFW has acted for clients in offshore jurisdictions for more than 20 years and opened its BVI office in 2022 to meet demand for high-value, complex cross-border disputes.

HFW Secures Landmark BVI Appeal Clarifying Directors’ Duties to Creditors in Insolvency

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