Bahamas Insolvency Regime Changes

Press Release–On 30 April 2012, the insolvency laws in the Bahamas were updated with the commencement of the Companies (Winding up Amendment) Act, 2011 and the International Business Companies (Winding up Amendment) Act, 2011. Given the increasingly active insolvency market in the Bahamas, the new laws are timely. The improvements will provide insolvency practitioners with clearly defined procedures and an increased ability to act with confidence.

Chartered accountants, including Edmund Rahming Managing Director of KRyS Global, formed an ad hoc Insolvency Practitioners Group to facilitate working sessions with the Attorney-General on the revamp of liquidation laws.

The new laws may have a dramatic impact on insolvency procedures and who can participate in the field.

Some new or now codified features of liquidation laws are:

• Representatives of foreign companies, under foreign insolvency proceedings in their home countries, may seek assistance from the court in their dealings in the Bahamas;
• The court may make specific alternative remedies for petitions presented on “just and equitable” grounds including having the company refrain from doing or continuing an act complained of by the petitioner, regulating conduct of the company’s affairs in the future, or allowing civil proceedings to be brought on behalf of the petitioner;
• Voluntary liquidations are only appropriate where the company is solvent;
• Remuneration of the liquidator from trust assets held by a company to the extent activities conducted by the liquidators benefitted the trust assets and those entitled;
• Actions involving fraud “in anticipation” of winding up a company are codified as an offence carrying penalties of $25,000 and/or 5 years in jail. In addition, payments made to creditors will automatically be deemed voidable preferences if made when the company is insolvent and within a six-month period prior to winding up the company.

The changes are meant to bring the Bahamas current with what you would expect in a modern jurisdiction which has companies that are used all over the world for all manner of things. People today expect to have a very modern insolvency regime with the kind of provisions that are more universal.