Carey Olsen's restructuring and insolvency team has
succeeded in applying to the Royal Court of Guernsey for the
restoration of K2 Insurance Limited ("K2"), a liquidated
and dissolved company, enabling the company to subsequently recover
a substantial asset. Advocate David Jones and Associate Harry Stirk
acted for Ian Damarell of BDO Limited, the liquidator of K2.
K2 was as a captive insurance company ultimately owned by G4S
plc, for which it wrote insurance policies. Following a group
reorganisation, it was decided that K2 was no longer needed
and should be voluntarily liquidated on a solvent basis. K2
was removed from the Register of Companies on 29 September
2010, but in 2012 it was discovered that K2 had overpaid for
certain insurance premiums and was owed a substantial refund
from its reinsurer. The reinsurer could only make repayment to
K2 which, technically had ceased to exist at the date of its
dissolution. It was therefore necessary to restore K2 to the
Register of Companies so that it could receive the repayment
and distribute it, before being dissolved again.
Detailed evidence was presented to the Royal Court in relation
to the chronology of events leading up to K2's dissolution
and its entitlement to repayment. Careful consideration was
also given to reappointing K2's former liquidator and devising
a mechanism by which the repayment could be received,
processed and subsequently distributed to K2's
members. Advocate Jones persuaded the Royal Court that it was
just to restore K2 and to reappoint Mr Damarell as its
The case is of interest because it is one of the very first of
its kind in Guernsey; previously, it was not possible in
Guernsey to restore a company that had been dissolved
following liquidation, whilst it was possible to restore a company
that had been struck-off as a result of administrative
failings or voluntarily. The Companies (Guernsey) Law, 2008
(Amendment) Ordinance 2014, which came into force on 2
November 2014, changed the position. There is some debate
around this development in Guernsey's company law
legislation. For some time, insolvency office holders had
understandably sought its introduction to cover situations
akin to the one above where assets are discovered
post-dissolution. The change in the law allows the restoration
of a company up to ten years after
its dissolution. Conversely, the new provisions have
removed the finality that was previously associated with the
winding up process.
Advocate Jones commented: "This case was the perfect
example of the benefits of the latest changes to the
legislation. The liquidator diligently performed his role prior
to dissolution. When new assets came to light he was enabled
to return further value to the former members of K2 by
"In light of the ability to restore dissolved companies, it
is now more important than ever for companies to ensure that
they conduct the winding up process thoroughly and that they
consider utilising the services of experienced professional
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A guide which outlines the procedures to wind up Jersey registered companies, the circumstances in which transactions entered into by an insolvent company may be set aside, and the circumstances in which a company’s officers and managers may incur civil or criminal liability.
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