In a recent hearing of the Supreme Court of Bermuda, Chief Justice Hargun made an order validating the sale by GTL International Limited (In Provisional Liquidation) (the Company) of 12 of its subsidiaries. The Company is part of a larger global group of companies which operates in the telecommunications sector.
The Company was placed into provisional liquidation in order to conduct a restructuring. During the course of formulating the restructuring, it was determined that due to the deteriorating cash flow position of the Company, a sale of the Company’s shareholdings in its subsidiaries was necessary to ensure that the subsidiaries remained operational and enable the Company to obtain the highest possible return for creditors. The terms of the light touch provisional liquidation left the power of sale with the board of directors.
The Court was satisfied that the legal test for the disposition of assets (as set out in In re IPOC International Growth Fund & Ors and elsewhere) was met and in view of the financial position of the Company, validated the sale of the assets of the Company whilst still in provisional liquidation. By validating the sale, the Court allowed a previously negotiated accelerated M&A process to complete.
Harneys and Zuill & Co*, acted on behalf of the Company in seeking validation of the sale of the Company’s shareholdings in the subsidiaries prior to placing the Company into liquidation. A validation order was required, as under the Bermuda Companies Act 1981, any disposition of property by a company made after the commencement of a winding up of a company is void without sanction of the Court.
*Zuill & Co. is an independent Bermudian law firm that operates in an exclusive relationship with Harneys.