Steven Goran Stevanovich (Appellant) v Matthew Richardson and another (as Joint Liquidations of Barrington Capital Group Ltd (In Liquidation)) (Respondent) (Virgin Islands)
Case ID: JCPC 2023/0104
Jurisdiction: Court of Appeal of the Eastern Caribbean Supreme Court (British Virgin Islands)
Case summary
Issue
Can the appellant, as the former director of a company in liquidation, apply under section 273 of the Insolvency Act 2003 to reverse a decision made by the liquidators of the company to admit a claim in the liquidation?
Can the court exercise its inherent jurisdiction to require the liquidators to make an application under section 210 of the Insolvency Act 2003 to amend or remove the claim?
Facts
The appellant was the sole director of an investment fund, Barrington Capital Group Limited ("Barrington"), which was incorporated in the Territory of the Virgin Islands on 12 September 2000. Its sole shareholder was and remains Bermuda Administrative Service Limited which is beneficially owned by the appellant's family and associates.
During the course of its business as an investment fund, Barrington had advanced loans to a company incorporated in the United States, Petters Company Inc ("Petters"), which were duly repaid with interest. Petters was later discovered to be part of a fraudulent Ponzi scheme. In 2008 a Chapter 11 Trustee was appointed over Petters (the "Petters Trustee"). On 2 December 2009, the orchestrator of the Ponzi scheme, Mr Petters, was convicted on charges of mail and wire fraud, money laundering and conspiracy.
On 19 August 2010 the appellant resigned as director of Barrington and new directors were appointed. The new directors resolved to place Barrington into voluntary liquidation. The company was certified as solvent, its remaining assets were distributed to its shareholder, and it was subsequently dissolved on 14 January 2011.
The Petters Trustee brought proceedings against Barrington, the appellant and others in a Minnesota court and served Barrington on 16 November 2010. Barrington did not participate in those proceedings on the basis that it was not present within the jurisdiction of the United States.
On 16 April 2013 the Petters Trustee applied to the BVI Commercial Court for a declaration that the dissolution of Barrington in 2011 was void and for the appointment of the respondents as joint liquidators of Barrington. The applications were granted and the Trustee subsequently submitted a claim in the liquidation for up to USD 424 million. Two years later, the Petters Trustee secured default judgment against Barrington for USD 500 million. The respondents admitted a claim of USD 398,503,855.56 in the liquidation.
On 7 October 2016 the respondents commenced proceedings against the appellant seeking damages for breach of duties when he was a director of Barrington. On 24 September 2018, the appellant applied to the BVI Commercial Court for an order under section 273 of the Insolvency Act 12003 to reverse the respondents' admission of the Petters Trustee's claim or an order pursuant to the court's inherent jurisdiction to direct the respondents to apply to expunge the Petters Trustee’s claim under section 210 of the Insolvency Act. Both applications were dismissed at first instance and on appeal to the Court of Appeal. The appellant now appeals to the Board of the Judicial Committee of the Privy Council.
Parties
Appellant
Steven Goran Stevanovich
Respondent
(1) David Bennett (2) Matthew Richardson (as Joint Liquidators of Barrington Capital Group Ltd (In Liquidation))
Appeal
Justices
Lord Hodge, Lord Briggs, Lord Leggatt, Lord Richards, Dame Janice Pereira
Hearing start date
9 December 2024
Hearing finish date
9 December 2024