On 6 November 2017 the BVI Commercial Court, sitting in St Lucia, placed Sherbrooke Group Limited (Sherbrooke) into liquidation. Mark McDonald and Michael Leeds of Grant Thornton were appointed as Sherbrooke’s liquidators.
The liquidation application was brought by the trustees of the deceased estate of Boris Berezovsky. They sought their own appointment over Sherbrooke (as liquidators) in order to investigate its affairs. They did this because during their investigation into Mr Berezovsky’s estate, it became clear that large sums of money had passed from Mr Berezovsky to Sherbrooke before Mr Berezovsky’s death and during a period when he was clearly unable to pay his creditors. The transactions were described either as loans or simply as payments. The trustees were, however, unable to find any documentation evidencing these so-called loans and the evidence instead pointed to Sherbrooke having been used simply as a treasury vehicle for Mr Berezovsky.
The issue with the application was that as no loan documentation could be found it was difficult to state categorically that the loans were due and payable. This made the existence of a clear existing debt from Sherbrooke to Mr Berezovsky’s estate less clear cut. The trustees nevertheless argued that court could be confident that Sherbrooke could be would up on the insolvency ground because there was good evidence to suggest that Sherbrooke was either already subject to a liability to pay or, at the very least, a contingent liability. As those behind Sherbrooke had allowed it to be struck off there was also evidence to suggest that it would not be able to pay any debt to which it was subject.
The trustees also applied to wind up Sherbrooke on the just and equitable ground on the basis that the appointment of liquidators was necessary to investigate the affairs of the company. Indeed the appointment of liquidators over Sherbrooke was the only realistic way in which the substantial cash transfers into it which appeared to come from Mr Berezovsky could be investigated and pursued.
Sherbrooke was ultimately placed into liquidation on both the insolvency and just and equitable grounds. The decision in Sherbrooke is unreported. It is, however, a significant decision because it shows that the BVI court will take a pragmatic approach when dealing with transfers to companies which are clearly related to an insolvent person or company and where there appears to have been an attempt to use the company to place assets out of the reach of creditors. The decision follows on from an earlier decision in relation to a company called Approach Group Ltd which is also unreported.