In Stevanovich, a BVI company (Barrington), entered voluntary liquidation in 2010. As part of this process, Barrington’s sole director, Mr Stevanovich, resigned in August 2010. In October 2010 a US Chapter 11 Trustee (US Trustee) filed a complaint in US proceedings against Barrington, Mr Stevanovich and others seeking, inter alia, the return of monies remitted by a US company (Petters) to Barrington as part of a Ponzi scheme. Barrington and Stevanovich were unaware of the fraudulent nature of Petters’ activities.

Barrington was dissolved in early 2011 albeit the US Trustee had the dissolution declared void in early 2013 with the result that Barrington was placed back in liquidation under the Court’s supervision with liquidators appointed by the Court (the Liquidators). The US Trustee claimed in the liquidation (Claim), which Claim the Liquidators admitted in the sum of US$398m, thereby rendering Barrington insolvent.

To recover amounts in the admitted Claim, in 2016, the Liquidators, funded by the US Trustee, brought BVI proceedings against Mr Stevanovich for misfeasance as a director and fraudulent trading (Main Proceedings). The Main Proceedings were stayed pending determination of Mr Stevanovich’s s273 challenge discussed further below.

In 2018, Mr Stevanovich challenged the Liquidators’ admission of the Claim under s273 of the IA which provides that “a person aggrieved by an act, omission or decision of an office holder may apply to the Court and the Court may confirm, reverse or modify the act, omission or decision of the office holder”. Mr Stevanovich failed on the basis that he was not a “person aggrieved” and so had no standing to bring a challenge pursuant to s273.

In reaching its decision, the PC drew heavily on the 2023 UK Supreme Court decision in Brake v Chedington Court Estate Ltd. In Brake, the Supreme Court considered the similarly, but not identically worded, s168(5) of the UK Insolvency Act 1986. Lord Richards confirmed that despite the apparent breadth of the statutory language, standing under provisions like s168(5) is restricted to three broad categories:

1. First, subject to limited exceptions, a bankrupt or contributory in a corporate insolvency who can show that there is or is likely to be a surplus of assets once all liabilities to creditors and the costs and expenses of the bankruptcy or liquidation have been paid.
2. Second, a creditor who is affected in their capacity as creditor or a bankrupt who can demonstrate a surplus and is affected in their capacity as a bankrupt.
3. Third, other, very limited, circumstances which will provide standing to an applicant – whether or not the applicant is the bankrupt, a creditor or a contributory – confined to cases where the challenge concerns a matter which could only arise in a bankruptcy or liquidation and in which the applicant has a direct and legitimate interest.

Mr Stevanovich did not fall within the first two categories because he did not claim to be a creditor or a member/contributory of Barrington: he was a former sole director. Accordingly, his claim to standing depended on the third category. Applying previous authority, the PC held that this third category was unsatisfied.

Mr Stevanovich was not directly affected by the Liquidator’s decision to admit the claim – if he succeeded in his defence in the Main Proceedings, the admission of the Claim would not matter to him. If the Main Proceedings were not brought against him, he would be a stranger to the liquidation and his rights and interest would not be affected at all.

Owing to the fact that the validity of the Liquidator’s decision to admit the Claim would be determined in the Main Proceedings, and Mr Stevanovich was not directly interested in the Liquidator’s decision to admit the Claim, Mr Stevanovich lacked standing under s273 of the IA.

The Stevanovich  decision accordingly draws clear lines around who can challenge liquidator decisions under section 273 of the BVI IA. In doing so, it reaffirms that insolvency remedies are not open to any party affected indirectly by a liquidator’s acts, particularly defendants seeking tactical relief from misfeasance claims.

The decision underscores a broader principle in insolvency law: the framework exists to protect the collective interests of creditors — not to serve as a defensive shield for litigation risk.

The judgment was given by the Caribbean’s own Dame Janice Pereira DBE, the former Chief Justice of the Eastern Caribbean Supreme Court, of which the BVI is a member. See our earlier blog on her appointment as a member of the Judicial Committee of the Privy Council here.