What forms of security can be granted over immovable and movable property? What formalities are required and what is the impact if such formalities are not complied with?
The following types of security are common in Bermuda security arrangements —
- Fixed Charge: where property is appropriated to secure a debt, to which the chargee may resort in the event of a default, and the chargor’s ability to deal with the property is restricted;
- Floating Charge: where the chargor is free to deal with assets comprised in the charge (usually identified by class and can include present and future property) until an event occurs that causes the floating charge to attach to the charged assets;
- Legal Mortgage: where legal ownership of an asset is transferred from the mortgagor/charger to the mortgagee/chargee, subject to an express or implied condition requiring the mortgagee to transfer title back to the mortgagor when the obligation for which the security was created is discharged and usually providing express powers of retention, sale or foreclosure or the power to appoint a receiver; and
- Equitable Mortgage: where beneficial ownership of an asset is transferred from the mortgagor to the mortgagee/chargee but the mortgagor/chargor retains legal title to the asset, either because that is the intention of the parties or because the formalities for the creation of a legal mortgage/chargee have not been complied with.
Mortgages over certain types of asset (for instance, real property) must be created by deed. The effect of non-compliance with these formalities is to render the security ineffective, however purported rights in rem in an imperfect security document may still be effective in creating security arrangements. Other security arrangements must be created in writing and, although not strictly necessary, are often created by deed as a matter of practice.
Any interest created in property by a Bermuda company by way of security can be registered with the Registrar of Companies. Registration is not necessary for security to take effect but the priority of competing securities created by a company is determined by the date of registration and, accordingly, any such security should be registered promptly.
Non-compliance with any applicable formalities renders the security ineffective. However, an imperfect security document may be effective in creating security arrangements.
What practical issues do secured creditors face in enforcing their security package (e.g. timing issues, requirement for court involvement) in out-of-court and/or insolvency proceedings?
Secured creditors (excluding holders of uncrystallised floating charges) are generally free to enforce their security against debtors in any way that is available to them under the security document (for example: possession, sale or the appointment of a receiver) notwithstanding that a company is in a liquidation. As a result, secured creditors rarely face any practical barriers to enforcement.
Additionally, if it was necessary for a secured creditor to pursue legal proceedings against a company that was in liquidation for the purposes of enforcing their security, it is likely that the Court would accede to such a request notwithstanding an automatic stay of proceedings upon the winding-up of that company or the appointment of a provisional liquidator.
What restructuring and rescue procedures are available in the jurisdiction, what are the entry requirements and how is a restructuring plan approved and implemented? Does management continue to operate the business and / or is the debtor subject to supervision? What roles do the court and other stakeholders play?
The principal rescue procedure in Bermuda is provisional liquidation. Provisional liquidation is a flexible procedure where, as an alternative to making a winding up order, joint provisional liquidators (often referred to as ‘JPLs’) can be appointed for restructuring purposes with powers granted by the Court that are tailored to meet the company’s situation.
Provisional liquidation provides additional strategic advantages that are particularly valuable in complex restructurings involving multiple international jurisdictions and stakeholders. By participating in provisional liquidation, creditors may benefit from court-sanctioned mechanisms that facilitate negotiations with other classes of creditors, thereby achieving broader consensus and reducing litigation risk. Court supervision also assures stakeholders that transactions conducted during provisional liquidation are transparent, equitable, and subject to judicial oversight, mitigating the risk of subsequent challenges.
The provisional liquidation process allows for the possibility of debtor-in-possession financing arrangements or other restructuring funding solutions. Such financing solutions, approved by the court and monitored by provisional liquidators, can provide immediate liquidity to support ongoing operations during the restructuring process. This financial flexibility is typically unavailable in straightforward security enforcement scenarios, potentially leading to deterioration of asset value during enforcement.
The ‘light-touch’ provisional liquidation operates in a similar manner to chapter 11 in the US or administration in the UK but with even greater flexibility. There are few statutory requirements to be satisfied before a provisional liquidator is appointed save for that a sole a liquidator must reside in Bermuda (and in the case of joint liquidators, at least one must be resident) and his or her credentials must be accepted by the court. The function and roles of a provisional liquidator are set out in the order appointing the provisional liquidators, which can be tailored to suit the particular situation without statutory constraints. The appointment can have cross-border effect, even in jurisdictions without ‘light-touch’ insolvency procedures. As a ‘debtor in possession’ procedure, companies can maintain operations during provisional liquidation and enjoy the benefit of the stay against proceedings. Creditors can have confidence that the activities of a company in provisional liquidation will be supervised by the provisional liquidator, acting as an officer of the court.
Provisional liquidation is often seen as a preliminary step to achieving a restructuring by way of a scheme of arrangement. The provisional liquidators draw on their expertise to work with the company to develop restructuring proposals. Crucially, a provisional liquidator can liaise with and advise the creditors of the company candidly on the merits and viability of restructuring proposals. Creditors can rely on the advice of provisional liquidators in the knowledge that they have a duty to advance the creditors’ interests above all else as independent officers of the Court.
Provisional liquidators may therefore cause a company in provisional liquidation to propose a scheme of arrangement. A scheme of arrangement is a court-supervised restructuring or reorganisation procedure, provided for in Sections 99 and 100 of the Companies Act 1981. A proposed scheme must represent a compromise or arrangement between the company and its creditors or members, or any class thereof.
Scheme proceedings are commenced by applying to the Bermuda courts for directions to convene meetings with the various classes of creditors who will be affected by the scheme’s proposals. Once the meetings have been held and the statutory voting thresholds have been met, a further application is made to the court to sanction the scheme.
Classes of creditors are determined by the requirement for a class to be confined to those persons whose rights (as affected by the proposed scheme) are not so dissimilar as to make it impossible for them to consult together with a view to their common interest. For a scheme to be presented to the Bermuda courts for sanction, a majority in number representing 75 percent in value of the creditors or members present and voting either in person or by proxy at each creditors’ or members’ class meeting, as the case may be, must approve the scheme.
There is no cross-class cram down in Bermuda. To the extent that any single class of affected creditors or members fails to approve the scheme of arrangement by the requisite majorities, the scheme will fail in its totality.
A scheme of arrangement is not, however, the only means by which restructuring transactions can be effected. Provisional liquidators may use their powers, or powers exercisable with the sanction of the Court, to enter into a transaction without a scheme. This may be a more appropriate course of action where, for instance, all counterparties to a transaction and all stakeholders with an economic interest in the company, consent to the transaction. Under these circumstances, there is no need for a scheme to bind dissenting members of any class. An example of such a transaction, is the recent cross-border debt restructuring of Afiniti Limited.
Subject to the court’s or committee of inspection’s sanction, expenses incurred by the liquidator in carrying on the business will be paid out of the assets of the company as expenses of the liquidation in priority to other unsecured creditors.
Can a debtor in restructuring proceedings obtain new financing and are any special priorities afforded to such financing (if available)?
Yes, funding in support of an insolvent company undergoing a restructuring process and the winding up of a company are available. Generally, the court will be invited to approve these arrangements, including any special priority to be afforded to financiers, although in certain circumstances approval of the court may not be necessary.
Can a restructuring proceeding release claims against non-debtor parties (e.g. guarantees granted by parent entities, claims against directors of the debtor), and, if so, in what circumstances?
Yes, depending on the law governing the underlying obligation, a scheme of arrangement may include third-party releases.
How do creditors organize themselves in these proceedings? Are advisory fees covered by the debtor and to what extent?
In a provisional liquidation, creditors are generally entitled to know the total assets and liabilities of the company and to receive copies of any reports submitted by the liquidator to the court. Creditors do not have a general right to access the books and records of the company, but may only do so through an application to the court. At the end of the liquidation, the liquidator must send a copy of the statement of receipts and payments of the liquidation to all creditors and contributories, together with a final report and notice of their intention to apply for release from the court.
In a scheme of arrangement, creditors receive an explanatory memorandum that details the nature and effect of the proposed scheme. The explanatory memorandum will include such financial information as is necessary to enable the creditors to make an informed decision regarding the scheme. Generally, creditors will receive notice of the proposed scheme of arrangement together with notice of the creditors’ meeting.
Advisory fees are payable out of the assets of the company and are subject to the priority rules (further explained below).
What is the test for insolvency? Is there any obligation on directors or officers of the debtor to open insolvency proceedings upon the debtor becoming distressed or insolvent? Are there any consequences for failure to do so?
The Companies Act 1981 does not define or use the terms ‘solvency’ or ‘insolvency’, but rather refers to a company being ‘unable to pay its debts’. A company will be deemed to be unable to pay its debts if:
- the court is satisfied that the company is unable to pay its debts taking into account the contingent and prospective liabilities of the company;
- the company fails to discharge an undisputed statutory demand exceeding $500 Bermuda dollars within 21 days; or
- execution of a judgment or order against the company is returned unsatisfied.
A company is not under any statutory duty to commence winding up in circumstances where it is insolvent or likely to become insolvent. Additionally, Bermuda law does not incorporate the concept of ‘wrongful trading’ in circumstances where the company continues to trade while insolvent, which means that directors are not required to file for insolvency proceedings when a company becomes insolvent. However, if it can be shown that the directors of a company failed to act in the best interests of the company’s creditors during that time, they may, depending on the circumstances incur personal liability for breach of their fiduciary duties.
What insolvency proceedings are available in the jurisdiction? Does management continue to operate the business and / or is the debtor subject to supervision? What roles do the court and other stakeholders play? How long does the process usually take to complete?
The insolvency procedures available under Bermuda law are as follows:
1. Liquidation under the supervision of the court (also known as compulsory liquidation):
Typically, a creditor seeking to place a debtor into an insolvent winding up in Bermuda will present a petition to the court seeking relief on the grounds that that company is unable to pay its debts; or that it is just and equitable for the company to be wound up. Once appointed, the liquidator must obtain the sanction of the court or the committee of inspection before taking certain actions. Upon the final distribution of the assets to the creditors or the members, the liquidator must obtain an order from the court for its release and for the dissolution of the company.
2. Provisional liquidation on a ‘full powers’ basis:
In circumstances where it is shown to be necessary and in the interest of creditors or the public, a provisional liquidator may be appointed on an ex parte basis to take control of and safeguard the assets. A court typically appoints a provisional liquidator on a full powers basis where there are serious regulatory concerns, a suspicion of fraud or cogent evidence demonstrating a likelihood that the directors may dispose of assets if tipped off about an impending winding-up petition. This form of provisional liquidation is known as provisional liquidation on a ‘full powers’ basis contrasted with provisional liquidation on a ‘light-touch’ basis explained above.
A debtor can continue to trade during insolvency proceedings. However, this should be with the Court’s blessing as, unless the Court orders otherwise, if a company is wound up any disposition of the company’s property after the date on which the winding-up petition was presented (to commence the insolvency or rescue proceedings) is void.
The timeline for completion of the insolvency proceedings varies and will largely depend on the complexity of the proceedings; for example the extent of the company’s assets and liabilities, the creditor profile and any ongoing litigation or regulatory matters.
What form of stay or moratorium applies in insolvency proceedings against the continuation of legal proceedings or the enforcement of creditors’ claims? Does that stay or moratorium have extraterritorial effect? In what circumstances may creditors benefit from any exceptions to such stay or moratorium?
When the Court has ordered the winding-up of a company or the appointment of provisional liquidator, an automatic stay is triggered preventing creditors from initiating or continuing any proceedings against the company except by leave of the Court. All creditors are bound by the automatic stay, though it does not prevent secured creditors (excluding holders of uncrystallised floating charges) enforcing their security using out of court mechanisms.
It is uncommon for the Court to grant leave to a creditor to pursue proceedings against a company during the automatic stay. However, if proceedings were necessary for a secured creditor to enforce their security, it is likely that the Court would allow those proceedings to advance notwithstanding the automatic stay.
The automatic stay has extra-territorial effect, as a matter of Bermuda law. However, it is important to note that although the stay purports to have worldwide effect, it does not necessarily mean that it will be automatically recognised in certain jurisdictions, and a court application seeking recognition of the automatic stay in another jurisdiction may be required depending on the circumstances of the case.
How do the creditors, and more generally any affected parties, proceed in such proceedings? What are the requirements and forms governing the adoption of any reorganisation plan (if any)?
Creditors’ meetings are not mandatory in a provisional liquidation, but they can prove a useful tool to update creditors and share views with them. The views of stakeholders, and in particular the creditors, play a critical role in the progress of a provisional liquidation. If a provisional liquidation fails, it will usually be in favour of an insolvent liquidation of the Company in question.
Often an order appointing provisional liquidators is coupled with an order adjourning a full winding-up petition. It follows that if the creditors become dissatisfied with the progress of the provisional liquidation, the company is at risk of being wound up. It is essential therefore in any provisional liquidation for office-holders, the Company and any Petitioning Creditor to carefully consider the views of the creditors.
In a scenario where a provisional liquidator is proposing a scheme, creditors will receive an explanatory memorandum that details the nature and effect of the proposed scheme and will asked to vote to accept or reject it at the relevant scheme meeting(s).
A committee of inspection may be formed consisting of creditors or contributories (members) of the company. Subject to the sanction of the court, members of the committee of inspection are appointed by resolution of the creditors or the contributories, typically at the first meeting of creditors or contributories.
How do creditors and other stakeholders rank on an insolvency of a debtor? Do any stakeholders enjoy particular priority (e.g. employees, pension liabilities, DIP financing)? Could the claims of any class of creditor be subordinated (e.g. recognition of subordination agreement)?
Priority of security interests granted by a Bermuda company in liquidation are governed by Bermuda law, regardless of the governing law of those security interests. When a Bermuda company is ordered to be wound-up, claims will generally be satisfied as follows:
- Claims arising under fixed charge security (can be realised and enforced outside of the liquidation process);
- Costs and expenses of the insolvency process/liquidation, e.g. costs of realising the assets, the liquidator’s lawyer’s fees (if applicable) and the liquidator’s remuneration
- Claims which have preferential status; (ranked equally);
a) taxes owing to the Bermuda government;
b) wages and salary, capped at $2,500 per employee;
c) accrued holiday remuneration owing to employees;
d) amounts due in respect of pension contributions payable by a company as employer;
e) amounts due in respect of any contributions payable by the company as employer of any persons under any contract of insurance; and
f) compensation for injuries and occupational illnesses arising out of and in the course of a worker’s employment.
4. Floating charge claims (that had not crystalised prior to the date of liquidation) ranked by time of registration;
5. Unsecured creditors;
6. Subordinated creditors (if any); and
7. Shareholders.
It is possible for a Bermuda company to enter into an agreement with its creditors for the claims of any class of creditor to be subordinated.
Can a debtor’s pre-insolvency transactions be challenged? If so, by whom, when and on what grounds? What is the effect of a successful challenge and how are the rights of third parties impacted?
Yes, transactions entered into by a company that subsequently becomes enters insolvency proceedings can be challenged and, in some cases, be set aside:
- Fraudulent preference: a transaction by an insolvent company with a view to giving a creditor preference over other creditors will be void if entered into within the period of six months ending on the presentation of a petition for the winding up of the company;
- Fraudulent conveyance: a transaction by a company, entered into at an undervalue, with the dominant purpose of putting property beyond the reach of a person or class of persons who is making (or may make) a claim against the company, may be challenged and declared void if entered into up to eight years after the transaction;
- Invalid floating charge: a floating charge granted by a company with the period of twelve months ending on the presentation of a petition for the winding up of the company will be void, except to the amount of any cash paid to the company subsequently or at the time of creation of the charge in consideration for its creation, unless it is proved that the company was solvent immediately after the charge’s creation;
- Invalid dispositions: any disposition of a company’s property after, (i) the presentation of a petition or, (ii) adoption of a shareholders’ resolution for the winding up of a company, if the company is subsequently ordered to be wound up by the Court, is void unless the Court orders otherwise.
How existing contracts are treated in restructuring and insolvency processes? Are the parties obliged to continue to perform their obligations? Will termination, retention of title and set-off provisions in these contracts remain enforceable? Is there any ability for either party to disclaim the contract?
In general, contracts can continue in force following a winding up order and may be performed and enforced by or against the company in a liquidation.
With the leave of the court, a liquidator may disclaim any property belonging to the company, whether real or personal, including any right of action or right under a contract that in the liquidator’s opinion is onerous for the company to hold or is otherwise unprofitable or unsaleable.
Before granting the liquidator leave to disclaim onerous property (including a contract), the court may require notice to be given to interested persons and may impose any conditions on the disclaimer as the court thinks just. From the date of the disclaimer, the company will be released from its obligations in or in respect of the released property.
The disclaimer does not, except so far as necessary, affect the rights or liabilities of any other parties. A person who is injured as a result of the disclaimer will be deemed a creditor in the company’s winding up in respect of the amount of the injury.
In the case of employment contracts, pursuant to section 33 of the Employment Act 2000 (Employment Act), upon the liquidation of an employer’s business, all employment contracts will be automatically terminated one month from the date of the winding up, unless the business is continuing to operate.
What conditions apply to the sale of assets / the entire business in a restructuring or insolvency process? Does the purchaser acquire the assets “free and clear” of claims and liabilities? Can security be released without creditor consent? Is credit bidding permitted? Are pre-packaged sales possible?
It is not possible for a liquidator to sell a secured asset without the consent of the secured creditor and such assets do not form part of the liquidation estate.
A liquidator may however, subject to the court’s or committee of inspection’s sanction, sell any unsecured asset or the entire business of the debtor. Unless the asset is subject to continuing security or as otherwise specifically agreed, the purchaser will acquire the asset ‘free and clear’ of claims without any liabilities attaching thereto.
In the ordinary course, stalking horse and credit bids (where the creditor is the original creditor or an assignee) are permissible in Bermuda. In assessing the fairness of a credit bid, the court will take into account relevant circumstances relating to the bid, and may seek to rely on an independent valuation by an expert assessor.
The Companies Act does not provide a statutory mechanism for an expedited reorganisation, including a reorganisation by way of a ‘pre-packaged’ arrangement. A reorganisation may be largely informally pre-negotiated with a liquidator prior to his or her appointment on the informal understanding that the liquidator will, once appointed, agree to the pre-negotiated deal. An informal arrangement of this nature will have a similar effect to a ‘pre-package’ deal but the structure, content and nature of each such arrangement will be bespoke to its specific circumstances.
The liquidator will not, and as a matter of law cannot, be bound to enter into the pre-negotiated arrangement if and to the extent that, upon his or her appointment, the liquidator does not consider the pre-negotiated arrangement to be in the best interests of the company’s creditors.
What duties and liabilities should directors and officers be mindful of when managing a distressed debtor? What are the consequences of breach of duty? Is there any scope for other parties (e.g. director, partner, shareholder, lender) to incur liability for the debts of an insolvent debtor and if so can they be covered by insurances?
In circumstances where a company is insolvent or is likely to become insolvent, the directors’ duty to act in the best interests of the company will include a duty to have regard to the interests of the company’s creditors. There is no bright line test as to when, and to what extent, the directors’ duties shift to the company’s creditors; the less the likelihood of the company escaping an insolvent winding up, the greater the degree to which the directors’ duties are owed to the company’s creditors and, if insolvent liquidation becomes inevitable, the creditors’ interests are predominant.
The Court has power to assess damages against any director or officer who misapplies, retains or otherwise becomes liable for any money or property of the company or who commits any misfeasance or breach of trust. A liquidator may also pursue claims for breach of duty against directors and officers. It is common practice, however, for Bermuda companies to indemnify directors and officers for their actions and omissions as such, which operates to prevent actions against a director or officers who enjoys such an indemnity, save in cases of fraud or dishonesty.
Generally, parent companies are liable only to the extent that any shares are not paid up, unless there is some other, freestanding course of action.
Do restructuring or insolvency proceedings have the effect of releasing directors and other stakeholders from liability for previous actions and decisions? In which context could the liability of the directors be sought?
To an extent. A company is permitted, by contract or in its bye-laws, to indemnify, exonerate or exempt its directors against liability attaching to them, other than in respect of fraud or dishonesty. Such releases can form part of a scheme of arrangement or other agreement proposed by a provisional liquidator.
Will a local court recognise foreign restructuring or insolvency proceedings over a local debtor? What is the process and test for achieving such recognition? Does recognition depend on the COMI of the debtor and/or the governing law of the debt to be compromised? Has the UNCITRAL Model Law on Cross Border Insolvency or the UNCITRAL Model Law on Recognition and Enforcement of Insolvency-Related Judgments been adopted or is it under consideration in your country?
Under the Reciprocal Judgements Act 1958 (Reciprocal Judgements Act), a judgment of a superior court in the United Kingdom or other designated common law jurisdiction may be registered as a judgment in the Bermuda court to the extent the foreign judgment is: final and conclusive as between the parties; and is for a fixed sum of money (not being in respect of taxes or in respect of fines or penalties).
Under Bermuda’s common law, the Bermuda court may, subject to certain requirements, recognise judgments from foreign jurisdictions not otherwise qualifying for registration under the Reciprocal Judgments Act for a liquidated sum by way of summary judgment.
Bermuda has not adopted the UNCITRAL Model Law on Cross-Border Insolvency and is not currently considering its adoption. Foreign liquidators may apply for recognition in Bermuda pursuant to Bermuda’s common law and the principles of comity.
The Bermuda court does not have jurisdiction to wind up an overseas company, save for under certain statutory exceptions: Pricewaterhouse Coopers v. Saad Investments Company Limited [2014] UKPC 35. Accordingly, it is generally not possible to obtain an ancillary winding-up order from the Bermuda court in respect of a company domiciled outside of Bermuda. Thus, forum shopping in Bermuda is not possible or relevant.
Conversely, if the main insolvency proceedings are in Bermuda, liquidators appointed by the Bermuda court may commence ancillary insolvency proceedings in other jurisdictions that permit ancillary proceedings, such as Hong Kong and England. The Bermuda court is willing to assist foreign courts where it has the common law power to do so. However, that power cannot be used to grant relief to a foreign liquidator in circumstances where the court in the country where the liquidation is taking place could not have granted such relief.
There have been relatively few Bermuda judgments considering the scope of assistance that might be given in support of foreign proceedings.
Can debtors incorporated elsewhere enter into restructuring or insolvency proceedings in the jurisdiction? What are the eligibility requirements? Are there any restrictions? Which country does your jurisdiction have the most cross-border problems with?
Only an entity incorporated in Bermuda may avail itself of the insolvency and restructuring processes.
Generally speaking, Bermuda does not encounter any cross-border problems with any jurisdiction.
How are groups of companies treated on the restructuring or insolvency of one or more members of that group? Is there scope for cooperation between office holders? For EU countries only: Have there been any changes in the consideration granted to groups of companies following the transposition of Directive 2019/1023?
Bermuda law does not recognize the concept of restructuring or insolvency proceedings for members of an enterprise group. Save for a scheme of arrangement, or other consensual arrangement, which may be implemented to restructure the assets and liabilities of multiple members of the same enterprise group, each entity is subject to separate insolvency and restructuring proceedings.
Is your country considering adoption of the UNCITRAL Model Law on Enterprise Group Insolvency?
Bermuda has not adopted the UNCITRAL Model Law and is not currently considering its adoption. It remains to be seen whether Bermuda will be influenced by the UK’s intention to adopt it.
Are there any proposed or upcoming changes to the restructuring / insolvency regime in your country?
There are proposals to create a new restructuring process involving the appointment of a ‘court-appointed restructuring officer’. While there would be considerable overlap between the roles of a court-appointed restructuring officer and provisional liquidator, there would be a greater focus on restructuring, clear criteria for appointment and a focus on prompt reporting on the feasibility of a restructuring proposal.
There are also proposals to reduce the threshold for approval of a scheme of arrangement from 75% of each class to 66% of each class.
The timeframe for the introduction of these reforms is, at present, uncertain.
Is your jurisdiction debtor or creditor friendly and was it always the case?
Bermuda is considered a creditor friendly jurisdiction by virtue of the fact that there is no debtor in possession mechanism to prevent enforcement of security in insolvency proceedings, and this has been traditionally the case, with the Companies Act 1981 modernizing and enhancing the restructuring and insolvency framework. Secured creditors are generally free to enforce their security against debtors outside of an insolvency process, including a liquidation. Unsecured creditors can seek a compulsory liquidation of the relevant debtor company and its assets be applied in satisfaction of debts. Unlike certain jurisdictions, there is no statutory corporate rescue process available to debtor companies in Bermuda (beyond a Scheme of arrangement).
Do sociopolitical factors give additional influence to certain stakeholders in restructurings or insolvencies in the jurisdiction (e.g. pressure around employees or pensions)? What role does the State play in relation to a distressed business (e.g. availability of state support)?
Sociopolitical factors do not play a role in restructurings or insolvencies. One possible exception is the Bermuda Monetary Authority having an ability to present a petition to wind up a company in the case of a regulated entity. Although the Bermuda government enjoys preferential status under Bermuda law in terms of taxes owed, it does not play a pivotal role in restructurings and insolvencies like revenue authorities in other jurisdictions. There is limited state support available for distressed businesses, which (save for limited schemes targeted at very small, local businesses) is generally determined on an ad hoc basis.
What are the greatest barriers to efficient and effective restructurings and insolvencies in the jurisdiction? Are there any proposals for reform to counter any such barriers?
Bermuda is viewed as a reliable and stable destination for restructuring and insolvency, maintaining a sophisticated and diligent approach to corporate structure and regulation. The jurisdiction offers flexible and innovative cross-border restructuring solutions for distressed multinational companies, while keeping creditor interests as a top priority. In 2024, there was an increase in debt restructuring activity, both in and out of court, demonstrating creditors’ confidence in Bermuda as a restructuring destination. Understanding the restructuring and insolvency options at an early stage is typically the primary barrier.
First published in Legal 500: Restructuring & Insolvency Comparative Guide, July 2025
