The Americas / The evolution of insolvency law in the Commonwealth Caribbean by Nadia Chiesa, Turks and Caicos Islands
The financial centres across the Commonwealth Caribbean are notable (and often notorious) for the corporate-friendly structures and “offshore” benefits that attract business and drive their financial services sectors. Less attention is paid to the bankruptcy and insolvency regimes in the region, a field of law that has seen significant development in certain jurisdictions while others face the challenge of reconciling the realities of modern companies with bankruptcy and insolvency laws rooted in English statutes that have long since been repealed in the UK.
To consider the current state of insolvency and restructuring reform in the Commonwealth (English-speaking) Caribbean, and where it may be headed, it is necessary to look at where it began. Today, the region includes more than 15 jurisdictions comprising independent states and British Overseas Territories. While their legal systems are derived from English common law (although St Lucia and Guyana have hybrid legal systems), each jurisdiction has independently developed its insolvency laws, at a different pace and in a different direction.
This article aims to give a brief overview of the wide disparity in approaches across the Commonwealth Caribbean to assist practitioners in navigating the sometimes-complex patchwork of legislation. (The British Virgin Islands, the Cayman Islands and Bermuda receive significant coverage as major players in the offshore realm, and this article focuses on the other jurisdictions in the region.)
Source of Legislation Models
A fundamental distinction in modern insolvency regimes in the Commonwealth Caribbean is whether the legislation is based on English or Canadian precedent. The jurisdictions that have modelled local legislation on the Canadian model include Barbados, Grenada, Jamaica, St. Kitts and Nevis, St. Vincent and the Grenadines, and Trinidad and Tobago. (Certain of these jurisdictions – Barbados, Jamaica and Trinidad and Tobago – have also modelled their company law on Canada’s federal Business Corporations Act.)
One of the hallmarks of the Canadian model is the statutory office of the Supervisor of Insolvency, which oversees, monitors, and protects the insolvency system of the jurisdiction. Among other responsibilities, the Supervisor of Insolvency licenses and regulates trustees.
The jurisdictions that continue to follow the English model include (perhaps obviously) the British Overseas Territories of Anguilla, Montserrat and the Turks and Caicos Islands (TCI), as well as Antigua and Barbuda, Belize, Dominica, and Guyana. With the exception of TCI’s Insolvency Ordinance, Cap. 16.18, the bankruptcy legislation in these jurisdictions must be read together with the company law. The former tends to deal with personal bankruptcy while the latter addresses corporate liquidation or winding up. Further, the statutes modelled on the English precedent provide for the statutory office of Official Receiver but there is no equivalent to the office of the Supervisor of Insolvency. Generally, there is no requirement that a trustee be licensed; a potential trustee must be deemed to be a “fit person” by the creditors or the Court, depending on the circumstances and legislation. There is little discussion of what constitutes a “fit person” in the legislation or case law.
With respect to a liquidator, a qualified insolvency practitioner who runs the liquidation process, Belize, Montserrat, and the TCI require a local liquidator. Legislation in the other jurisdictions either does not require a local liquidator or is silent on the issue.
Whether representing a company facing insolvency or restructuring, or creditors seeking to collect against a company in such a situation, it can be critical to understand the effect of commencing insolvency proceedings on other court processes. In most Commonwealth Caribbean jurisdictions, there is an automatic stay of court actions once the liquidation or winding-up proceedings commence. The exceptions are Anguilla, Belize, Montserrat, and TCI where a stay must be sought from the courts.
The region has seen Jamaica and Trinidad and Tobago, among others, overhaul their insolvency legislation over the last decade, while Anguilla and Belize, as two examples, have revitalized their company laws over the past year or so. Insolvency and restructuring in the Commonwealth Caribbean is likely to continue to evolve in the coming years, and practitioners will need to keep an eye on developments in the legislation.
To assist, the chart below sets out the applicable legislation dealing with insolvency and jurisdiction in each of the jurisdictions discussed in this article. (With thanks to Tim Prudhoe and L. Missick at Stanbrook Prudhoe for assistance with research.)
|Business Companies Act, Act No. 2 of 2022
Bankruptcy Act, Cap. B15
|Antigua and Barbuda
|Companies Act, Act No. 18 of 1995
Bankruptcy Act, Cap. 41
|Companies Act, Cap. 308
Bankruptcy and Insolvency Act, Cap. 303
|Bankruptcy Act, Cap. 244
Belize Companies Act, Act No. 11 of 2022
Belize Companies Regulations 2022
|Companies Act, Act 21 of 1994
Bankruptcy Act, Cap. 9.90
|Companies Act, Cap. 58A
Bankruptcy Act, Cap. 27
|Insolvency Act, Cap 12:21
Companies Act, Cap. 89
|Insolvency Act, 2014
The Companies Act, 2004, as amended
Insolvency Regulations, 2015
|Companies Act, Cap. 11.12
Bankruptcy Act, Cap. 3.03
|St. Kitts and Nevis
|Companies Act, Cap. 21.03
Bankruptcy Act, Cap. 5.04
|Bankruptcy and Insolvency Act, Cap. 136
Bankruptcy and Insolvency (Amendment) Act 2016
Bankruptcy and Insolvency (Amendment) Act 2017
Companies Act, Act No. 8 of 1994
|Turks and Caicos Islands
|Insolvency Ordinance, Cap. 16.18
|Trinidad and Tobago
|Bankruptcy and Insolvency Act, Act No. 26 of 2007
The Bankruptcy and Insolvency Regulations, 2014
Companies Act, Cap. 81:01
Author: Nadia Chiesa
Law Firm: Stanbrook Prudhoe
Country: Turks and Caicos Islands
Nadia Chiesa is an experienced advocate at Stanbrook Prudhoe. She regularly leads complex commercial litigation and multi-jurisdictional disputes across the Caribbean. Nadia
has appeared as lead counsel before the Caribbean Court of Justice, and frequently represents clients before the Eastern Caribbean Court of Appeal. She was previously a partner at a leading law firm in Toronto, Canada.