Antigua and Barbuda: Privy Council decision on unfair prejudice and insolvency

The Judicial Committee of the Privy Council delivered its opinion today in Stanford International Bank Ltd, Re (Antigua and Barbuda) [2019] UKPC 45. A summary is available here (pdf). The opinion is of particular interest because of the wide relevance of the central question before the Board: whether relief was available for oppressive or unfairly prejudicial conduct where a company was in liquidation. The Board held, by majority and with reference to authorities from across the Commonwealth, that such relief was not available. Lord Briggs (with whom Lord Wilson and Sir Andrew Longmore agreed) observed (paras. [56] and [57]):

There is nothing in section 204 [("Restraining Oppression")], construed as part of the [Antiguan International Business Corporations Act], which compels a conclusion that it provides relief in the context of insolvent liquidation. The breadth of the discretionary power given to the court and the broad range of stakeholders for whose benefit those powers may be exercised is perfectly consistent with an intention that they are designed and intended to be used entirely in the pre-liquidation context. Although it is difficult to discern a clear statutory prohibition of the use of those powers in an insolvency context, it is, in the Board’s view, fundamentally inappropriate that they should be so used.

This is mainly because relief from oppression or unfairly prejudicial conduct is conferred on essentially broad discretionary and equitable principles which simply cannot be made to fit within the implementation of the applicable insolvency scheme. The two frameworks (relief from oppression and the insolvency scheme) as described earlier in this judgment are simply incompatible with each other. They serve different objectives. One of them (the insolvency scheme) serves a recognised public interest whereas the other does not or, if it does at all, only to a much lesser extent, being concerned more with justice and equity as between stakeholders in the company’s affairs. The two frameworks are like chalk and cheese."

Antigua and Barbuda: High Court declines to interfere with liquidator's discretion regarding creditor distribution

The Stanford International Bank (SIB) was incorporated in Antigua and Barbuda under the International Business Corporations Act of Antigua and Barbuda, Cap. 222. The bank collapsed in 2009 and was placed in liquidation. The bank's current liquidators were appointed by the High Court of the Eastern Caribbean Supreme Court in 2011 and they decided to reduce the amount that the original liquidators had proposed distributing to the creditors. This reduction was challenged before the High Court, the court being called upon to interfere with the liquidator's discretion.

In an opinion delivered at the end of October, the court decided not to interfere, finding that the proposed distribution method was within the ambit of the liquidators' discretion: see here (pdf). In doing so, the court relied upon English authorities; it also considered the meaning of 'ponzi' scheme, referring to USA case law, and described SIB as  "... a monstrous behemoth, demonically mendacious, with some serpentine subtlety calculated towards evading scrutiny, festering in its own corruption beneath a beautiful skin – until it inevitably imploded" (para. 55).