Being Upset or Frustrated isn’t Enough. You Need to be a “Person Aggrieved”

The Judicial Committee of the Privy Council’s recent decision provides the first interpretation of section 273 of the BVI Insolvency Act 2003, addressing standing in corporate insolvency.

The Judicial Committee of the Privy Council (“UKPC”) has issued a decision in Stevanovich v Richardson & Anor [2025] UKPC 18, providing the first interpretation of section 273 of the British Virgin Islands (“BVI”) Insolvency Act 2003 (“the IA 2003”) by the UKPC. This case is one of the first presided over by Dame Janice Pereira, former Chief Justice of the Eastern Caribbean Supreme Court, following her appointment to the Privy Council on August 28, 2024.

Section 273 of the IA 2003

Section 273 of the IA 2003 permits a “person aggrieved” by an act, omission, or decision of an office holder, such as a liquidator, to apply to the court for relief. The court may confirm, reverse, or modify the office holder’s action. This provision, analogous to section 168(5) of the UK Insolvency Act 1986, enables stakeholders with a legitimate interest in the insolvency process to challenge decisions affecting the administration of the insolvent estate. However, the term “person aggrieved” is not defined in the IA 2003, requiring judicial interpretation to determine who has standing, typically limited to those with a direct legal interest, such as creditors or shareholders expecting a surplus.

The Facts

Steven Goran Stevanovich, a former director of Barrington Capital Group Ltd (in liquidation), sought to challenge the joint liquidators’ admission of a US$398.5 million claim submitted by a US Chapter 11 Trustee. The claim arose from loans to Petters Company Inc., later identified as a Ponzi scheme, with the Chapter 11 Trustee seeking to recover the transferred funds. The liquidators’ admission of the claim, following a US default judgment, rendered the company insolvent, leading to proceedings against Stevanovich for alleged fraudulent trading and misfeasance. Stevanovich applied under section 273 to reverse the claim’s admission or, alternatively, under section 210(2) of the IA 2003 to request a court direction for its expungement. Section 210(2) of the IA 2003 establishes a mechanism for the BVI court to review and modify claims admitted in a liquidation process.

The Legal Issues

The UKPC, presided over by Dame Janice Pereira and comprising Lords Hodge, Briggs, Leggatt, and Richards, examined two primary issues:

1. Whether Stevanovich qualified as a “person aggrieved” under section 273 of the IA 2003, conferring standing to challenge the liquidators’ decision.
2. Whether the court could exercise inherent jurisdiction under section 210(2) of the IA 2003 to direct the liquidators to expunge the claim and, if so, whether Stevanovich had standing to invoke this jurisdiction.

The Decision

The UKPC dismissed the appeal, clarifying the scope of third-party standing in insolvency proceedings:

1. Section 273 of the IA 2003: Referencing the UK Supreme Court’s decision in Brake v Chedington Court Estate Ltd [2023] UKSC 29, the UKPC determined that Stevanovich lacked standing as a “person aggrieved.” His interest was contingent upon defending separate proceedings, not directly impacted by the claim’s admission. Standing under section 273 requires a direct legal interest, typically limited to creditors, shareholders anticipating a surplus, or parties affected by insolvency-specific powers.
2. Section 210(2) of the IA 2003: The court held that section 210(2) restricts applications to liquidators or creditors, excluding third parties like Stevanovich.

Takeaways

The following are some of the key takeaways from the case:

1. Interpretation of Section 273 of the IA 2003: As the first UKPC ruling on section 273, it establishes a precedent for assessing standing in BVI insolvency proceedings, aligning with UK principles articulated in Brake Decision.
2. Third-Party Standing: The decision delineates the limited circumstances under which third parties, such as former directors, may challenge liquidators’ decisions, emphasising the need for a direct interest arising from insolvency processes.
3. Cross-Border Insolvency: The case illustrates the challenges of integrating US bankruptcy claims into BVI liquidations, offering insights into the interaction of common law and foreign insolvency regimes.
4. Fiduciary and Statutory Boundaries: It reinforces the protection of liquidators’ decisions from third-party challenges absent clear statutory or fiduciary breaches, safeguarding the administration of insolvent estates.