1. A computer implemented method for managing virtual networks, the method comprising the steps of: maintaining a fenced configuration of virtual machines deployed on a plurality of physical servers, wherein the fenced configuration is a logical group of virtual machines that reside on the plurality of physical servers, the logical group in which the virtual machines are network isolated from other virtual machines that are not a part of the logical group, the plurality of physical servers being communicatively coupled in a private network, the private network is connected to an external network through a network gateway; intercepting a plurality of outbound packets from a first virtual machine that resides on a first physical server in the plurality of physical servers, the plurality of outbound packets being destined for a second virtual machine that resides on a second physical server in the plurality of physical servers; and determining if the first virtual machine and the second virtual machine are a part of the fenced configuration, wherein if the first virtual machine and the second virtual machine are a part of the fenced configuration, transmitting each of the plurality of outbound packets at least to the second physical server on which the second virtual machine is deployed, wherein the second physical server further transmits the plurality of outbound packets to the second virtual machine; wherein if the first virtual machine is a part of the fenced configuration and the second virtual machine is not a part of the fenced configuration, dropping the plurality of outbound packets.