The Law Society of Jersey has issued guidance commenting on wrongful trading under Jersey law given the financial difficulties caused by the coronavirus (COVID-19) pandemic.

Today the Law Society of Jersey has issued this practice statement, which should give reassurance to directors of Jersey companies who may be worried about their personal liability for wrongful trading in the current situation.

The practice statement serves as a timely reminder that, under Jersey law:

  • a wrongful trading claim can only be made against a director if the relevant company becomes subject to formal insolvency proceedings; and
  • it is a defence to a claim of wrongful trading for a director to show that the director took reasonable steps to minimise losses to creditors from the point at which the director knew there was no prospect that (or was reckless as to whether) the company would avoid insolvency proceedings.

The statement also contains helpful guidance for directors on what may constitute "reasonable steps" and makes it clear that, provided a director acts responsibly and reasonably, they should not attract personal liability. For more information on this subject, see our briefing note here.

Originally published 13 May, 2020

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