Companies that hold assets in several different countries and that are beginning liquidation proceedings should investigate cross-border recognition for the liquidation. Different countries have different laws concerning companies that go out of business. Not every country will cooperate with a liquidation initiated in the courts of a different country.
Internationally, a number of countries have adopted the UNCITRAL Model Law on Cross-Border Insolvency developed by the United Nations Commission on International Trade Law. The model law provides an example of how countries could structure their insolvency and liquidation laws to enable easy cross-border cooperation. It allows liquidators and creditors to more easily access the courts and legal proceedings across borders.
The Bahamas has not adopted the UNCITRAL Model Law. However, its laws do assist liquidating companies in many of the same ways the model law does. For example, the Companies Act and the International Business Companies Act provide for international cooperation in insolvency. Bahamian courts may make orders related to foreign insolvency proceedings for some foreign countries if the foreign insolvency representative (such as a liquidator) applies to the Bahamian court. Companies Act, Section 254; International Business Companies Act, Section 89. For example, a Bahamian court may order that property belonging to a liquidating company be turned over to a foreign liquidator. Id.
Companies should note that the power to make this sort of court order is not the same as the power to enforce an order made by a foreign court. Bahamian courts may, under some circumstances, enforce orders made by foreign courts in liquidation proceedings. Courts follow the Reciprocal Enforcement of Judgments Act regarding foreign court orders, and only orders from certain jurisdictions can be registered and then enforced.
Companies liquidating in The Bahamas that have assets located outside The Bahamas must rely on their liquidators to assert control over these assets. Courts expect that liquidators will seek out the foreign assets and obtain control using whatever foreign procedures are available. Bahamian courts cannot and do not exert “in rem” jurisdiction or direct power to control and make decisions about the assets, because they are located on foreign soil.
To find out more about cross-border liquidation proceedings, visit Gonsalves-Sabola Chambers online or call the office at +1 242 326 6400.