Bermuda: The Winding-Up Of C&J Energy Limited In Bermuda In 35 Days: A Case Study Of Accelerated Winding-Up In Bermuda

Last Updated: 10 October 2019
Article by John S Wasty

Most Popular Article in Bermuda, October 2019

First published by International Corporate Rescue, 2017

In the recent decision of Re C&J Energy Ltd and another 1 the Supreme Court of Bermuda continued a line of judgments  which  establish  the  court's  willingness to provide, to the fullest extent permissible under its common and statutory powers, commercially sensible and pragmatic support to foreign insolvency and re­ structuring proceedings.

The commercial result of that matter: C&J Energy Services Ltd ('C&J Energy') and its Bermuda subsidiary company (collectively, the 'Bermuda companies') were dissolved by the Bermuda court in a break-neck 35 days from the grant of winding-up orders for the Bermuda companies. The expediency of the Bermuda companies' liquidations was the result of the Bermuda companies' use of three separate, but interrelated, mechanisms in the Bermuda winding-up regime:

(i) the appointment of provisional liquidators with limited powers to oversee the groups' restructuring under Chapter 11 of the US Bankruptcy Code ('Chapter 11 ');
(ii) the prospective recognition of the Bermuda companies' Chapter 11 plan in the absence of parallel schemes of arrangement in Bermuda; and
(iii) the accelerated winding-up of the Bermuda companies as shell companies.

Although the first mechanism has been used in Bermuda for many years to achieve an administration-like process in the absence of a statutory administration regime, the second mechanism had only recently been confirmed as forming part of the Bermuda liquidation regime and the third mechanism was wholly novel. C&J Energy is only a first instance decision, but it ushers in a welcomed increase in the flexibility of Bermuda's cross border restructuring and insolvency regime.

In this article, we discuss each of the 3 mechanisms that were necessary to achieve the accelerated dissolution of the Bermuda companies.

Appointment of provisional liquidators to oversee foreign restructuring proceedings

Prior to its restructuring, C&J Energy was the ultimate holding company of the C&J Energy group of companies. Desirous of pursuing a group restructuring, certain of the group entities filed for protection under Chapter 11. The day after the Chapter 11 filings, the Bermuda companies presented petitions for their windings-up but sought the immediate adjournment of the petitions for six months. At the same time, the Bermuda companies sought the appointment of joint provisional liquidators with limited powers to enable the Bermuda companies to participate in the group's Chapter 11 restructuring.

The statutory provisions in Bermuda as to when a provisional liquidator may be appointed and the terms of such appointment are extremely broad. A provisional liquidator may be appointed at any time after the presentation of a winding-up petition and prior to the appointment of a permanent liquidator, and may be appointed with such limited powers as the court considers appropriate in the circumstance.2 Upon the appointment of a provisional liquidator by the Bermuda court, an automatic stay of proceedings against the company arises in Bermuda (which may only be lifted by leave of the court).3

It is now beyond doubt that, on the application of a company, the Bermuda court may appoint a provisional liquidator in circumstances where: (i) the company is pursuing its restructuring under Chapter 11 (or some other appropriate foreign restructuring procedure); and (ii) the company wants to avail itself of the benefit of the statutory moratorium that will arise on the provisional liquidator's appointment.

As the court has previously commented:

'In practice, however, in circumstances where no suspicions about the integrity of the directors really exist, the provisional liquidator is appointed as part of a legal quid pro quo for receiving the benefit of the stay on proceedings that the appointment guarantees, Bermuda law presently lacking a formal equivalent of the US Chapter 11 regime or the English administration proceedings.'4

The Bermuda court appointed joint provisional liquidators over the Bermuda companies with powers to oversee the continuation of the Bermuda companies' businesses, including their restructuring under Chapter 11, by the Bermuda companies' respective boards of directors and the US Bankruptcy Court.

Recognition of the Plan

In December 2016, the US Bankruptcy Court confirmed a plan of reorganisation which included the Bermuda companies as debtors-in-possession ('Plan'). The Plan was overwhelmingly supported by the classes of creditors and contributories entitled to vote, being in all classes approved by more than 99.96% in value and 98.4% in number (with the majority of classes being approved by 100% in value and number). Follow­ing the implementation of the Plan, the estates of the Bermuda companies had for all practical purposes been effectively wound-up; the Bermuda companies had no foreseeable creditors, no assets and no shareholders with exercisable equity rights. The Plan expressly contemplated the liquidation of both Bermuda companies in Bermuda following the implementation of the Plan.

A few months prior to the confirmation of the Plan by the US Bankruptcy Court, the Bermuda court had recognised another Chapter 11 plan (in the absence of parallel scheme of arrangement proceedings in Bermuda) of a company in provisional liquidation by permanently staying in Bermuda all claims against that company that would be discharged pursuant to that Chapter 11 plan.5 In that matter, the Bermuda court recognised the Chapter 11 plan:

(a) on the basis of traditional recognition principles in the context of parallel insolvency proceedings and common law co-operation with foreign insolvency courts in relation to Bermuda companies;6 and
(b) to restrain abuses of process by preventing parties whose claims had been effectively dealt with un­der the Chapter 11 proceedings from re-litigating those claims in Bermuda. 7

The Bermuda companies sought from the Bermuda court, and obtained, recognition of the Plan by a permanent stay of all claims of creditors and shareholders that were bound by the Plan that may have or may be brought in Bermuda. In considering the Bermuda companies' application for recognition of the Plan, the Bermuda court was satisfied that the recognition order complied fully with the principles of private international law as, on its face, the recognition order stayed only the claims of those parties who were properly bound by the US Bankruptcy Court's confirmation order of the Plan.8

The effect of the recognition order was that, to the best of the Bermuda companies' and the joint provisional liquidators' beliefs, the claims of all known and foreseeable creditors and contributories against the estates of both Bermuda companies had been permanently stayed in Bermuda. At that stage of the proceedings, the joint provisional liquidators could, with a great degree of certainty, consider the Bermuda companies to be shell companies with no assets (which had been disposed of pursuant to the Plan) and no reasonably foreseeable liabilities (which had been compromised and stayed pursuant to the Plan and the Bermuda court's recognition order).

Accelerated winding-up in Bermuda

In their application for a recognition order, the Bermuda companies sought winding-up orders (which were granted) and the appointment of the joint provisional liquidators as permanent liquidators. Unusually, however, the Bermuda companies sought total dispensation from three statutory post-winding-up requirements: (i) the holding of the first meetings of creditors and contributories to decide whether to appoint permanent liquidators; (ii) the preparation of a statement of affairs by the permanent liquidators; and (iii) the preparation of a court-sanctioned list of contributories. The relevant statutory provisions expressly bestow on the court the discretion to dispense with the latter two requirements; which the court did without further ado. The dispensation of the requirement to convene the first meeting of creditors and contributories, however, required further analysis.

The statutory winding-up regime in Bermuda re­ quires a provisional liquidator to convene first meetings of creditors and contributories within 1 month of its appointment for purposes of determining whether to appoint permanent liquidators. The court may extend the period in which the meetings must be convened as it considers appropriate. The court will maim such orders in respect of the appointment of permanent liquidators as are necessary to give effect to the creditors' and contributories' resolutions, including deciding any differences between them. Where the court does not appoint a permanent liquidator 'the Official Receiver shall be the liquidator'.9

The Bermuda court is not expressly empowered to dispense with the requirement to convene the first meetings of creditors and contributories. The statutory regime does not, however, contemplate the scenario where the first creditor and contributory meetings cannot practically be convened as the estate of a company has already been wound up.10 On further analysis, the Bermuda court considered that the statutory regime is flexible enough to accommodate such a scenario:

(a) it is a long established practice of the Bermuda court to accept that strict compliance with the requirement to convene both creditor and contributory meetings is not necessary in circumstances where one meeting (usually the meeting of contributories) is inquorate or has no prospect of being convened;11
(b) the Bermuda court's power to extend the period in which the meeting of creditors and contributories must take place is unfettered so that the court may extend that period indefinitely by dispensing with the requirement altogether;12 and
(c) in such a scenario, all that is necessary is substantial compliance with the statutory regime.13

In relation to the Bermuda companies' applications, the Bermuda court appointed the joint provisional liquidators as permanent liquidators; in all the circumstances of that case, appointment of the joint provisional liquidators as permanent liquidators for the narrow purpose of pursuing the accelerated windings-up of the Bermuda companies constituted substantial compliance with the statutory regime.14

The court appears, however, to have raised the possibility that the formal appointment of a permanent liquidator in similar circumstances to those of the Bermuda companies may not be necessary at all:

'Nothing of substance in my judgment turned on whether the JPLs were authorized to summarily conclude the winding-up wearing provisional liquidator hats or permanent liquidator hats. They were clearly legally entitled to remain in office as provisional liquidators until another liquidator was appointed in any event. Any defect in their nomenclature for the brief period required to apply for the Companies' dissolution would be cured by section 173(5) ["the acts of a liquidator shall be valid notwithstanding any defect which may be afterwards found in his appointment or qualifications"]. Their main task was to apply for the Companies' dissolution under a statutory provision which is primarily designed to be deployed in circumstances which clearly applied to the present case: the Companies' affairs had been "fully wound up". The term "liquidator" in section 200(1) of the Act, when that section is read with section l7l(a), can in any event fairly be read as including a provisional liquidator where, for good cause, the Court has declined to appoint any other person as liquidator and the Official Receiver has understandably not sought to act either. Section 200 provides:

"(1) When the affairs of a company have been completely wound up, the Court, if the liquidator makes an application in that behalf, shall make an order that the company be dissolved from the date of the order, and the company shall be dissolved accordingly".'

Dissolution of the companies

The orders winding-up the Bermuda companies and appointing the permanent liquidators were granted on 23 February 2017. Thirty-five days later, and following the expiry of the 21 day objection period from the date on which the permanent liquidators gave notice of their intention to apply for their release and the dissolutions of the Bermuda companies, the Bermuda companies were dissolved by order of the court.


Bermuda entities that are interested in pursuing their restructuring under foreign proceedings should carefully consider the benefits and potential risks of seeking to rely on recognition of those proceedings in the absence of parallel restructuring proceedings in Bermuda. A creditor or shareholder that is not bound by the foreign proceedings, for whatever reason, may pursue their claims against the Bermuda entity in Bermuda notwithstanding recognition of the foreign restructuring proceedings. In appropriate circumstances, however, recognition of foreign restructuring proceedings (in the absence of parallel restructuring proceedings in Bermuda) coupled with the potential for a greatly accelerated winding-up process may provide Bermuda entities a distinct advantage in the speed.


1 Re C&J Energy Ltd and another [2017} SC (Eda) 20.

2 Companies Act 1981, section 170.

3 Companies Act 1981, section 167(4)

4 Discover Reinsurance Co v PEG Reinsurance Co Ltd [2006] Bda L.R 88, para 20.

5 Re Energy XXI [2016] SC (Bda) 79 Com.

6 Ibid, para 27.

7 Ibid, para 37.

8 Re C&J Energy Ltd and another [2017] SC (Bda) 20, para 19.

9 Companies Act, section 171.

10 Re C&J Energy Ltdand anotller [2017] SC (Bda) 20, para 42.

11 Ibid, para 31.

12 Ibid, para 33.

13 Ibid, para 40.

14 Ibid, para 40.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions