The application in the BVI for a freezing injunction was brought by Parles A.S. (Parles) and Mr Perner against Winsley Finance Limited (Winsley) initially in support of proceedings that they said had been instituted or were about to be instituted in the Czech Republic for debts said to be owed by Mr Pernička to both Parles and Mr Perner. The BVI application was brought because Mr Pernička was believed to be the sole shareholder of Winsley and so ultimately enforcement measures could be taken against Winsley as his asset. Winsley’s only asset was a claim against the Government of Croatia for potential damages in relation to non-payment for a delivery of anti-air defence weapon systems during the mid-90s potentially worth millions of dollars.

Parles had, in fact, instituted a debt claim in the Czech Republic but this claim was for a much smaller amount than Mr Perner’s claim. Mr Perner, however, ultimately did not institute legal proceedings but instead elected to apply in the Czech Republic for the appointment of an executor to enforce the debt. By the time of the court hearing, however, Parles had initiated bankruptcy proceedings in the Czech Republic and Mr Pernička was subject to those proceedings.

The potential hurdle facing the Applicants was that apart from the small claim that had been issued by Parles in the Czech Republic, when the application for freezing relief was granted and when the matter came on for hearing, there were no extant legal proceedings in support of which the freezing order could be granted. There would therefore be no judgment to enforce. The Applicants therefore relied upon the fact that as bankruptcy proceedings had been initiated (albeit at that stage only an Interim Administrator had been appointed) a freezing injunction could be granted in support of those proceedings.

Justice Mangatal agreed with the Applicants that freezing relief could be granted in support of insolvency proceedings. In reaching this conclusion she noted that the particular nature of the relief sought by means of bringing insolvency proceedings does not disable the petitioning creditor from asserting that he is pursuing a cause of action for the purpose of conferring jurisdiction on the court to grant the relief. She considered that combining the reasoning in Egleton  and Broad Idea  the court did have jurisdiction to grant a freezing order on the application of a petitioning creditor because the creditor is not disabled from asserting that he is pursuing proceedings that are of a nature that confer jurisdiction on the court. She noted, however, that as a matter of discretion there are good reasons why, if an application is to be made, it should be the liquidator (or provisional liquidator) who makes the application and it would only be exceptional circumstances in which it would be possible for creditors to obtain freezing orders against potential judgment debtors of the company sought to be wound up. This position also follows Egleton.

The judgment is clearly significant as it affirms that in some circumstances (albeit exceptional circumstances although arguably there was nothing exceptional in this case), creditors can seek injunctive relief in the BVI in support of foreign insolvency proceedings. It also illustrates that this relief can be sought and obtained before such proceedings have even been instituted.

Another (arguably less significant) aspect of this case is the fact that the initial injunction was obtained not only in reliance upon the debts of Parles and Mr Perner but on the basis of debts allegedly owned by two other individuals. The injunction was then obtained over the entire amount said to be owed to the four parties even though only two were applicants. It was later sought to add the two additional alleged creditors as Applicants but this application was refused. The court then reduced the amount of the injunction to cover only sums said to be due to the two Applicants. This affirms the principle that the debts of third parties cannot be relied upon to obtain injunctive relief. Harneys acted for Winsley in successfully having the injunction reduced in value.