Guernsey: Recognition Of Foreign Insolvency Office Holders In Guernsey

Last Updated: 22 September 2009

Introduction

Insolvency office holders appointed in foreign jurisdictions often need to come to Guernsey to recover assets of the insolvent entity which are being held in the jurisdiction. Part of that process will involve recognition of the officer holder's proceedings in question by the Royal Court of Guernsey ("Royal Court") which will then, in many circumstances, enable the office holder to take the recovery action in question as if it were his home jurisdiction. As Guernsey is not part of the European Union, and as it currently has no plans to adopt the UNCITRAL model law of cross- border insolvency, the foreign office holder has two options when seeking recognition from the Royal Court, depending in which foreign jurisdiction the insolvency proceedings have been opened.

Judicial International Cooperation

Under section 426 of the UK Insolvency Act 1986 ("1986 Act"), cooperation and reciprocal assistance in the insolvency arena between the various courts of the United Kingdom and other designated countries and territories is promoted and encouraged. The Insolvency Act 1986 (Guernsey) Order 1989 extended subsections (4), (5), (10) and (11) of section 426 to Guernsey which means that the Royal Court is empowered to provided judicial assistance on insolvency matters to any of the courts of England & Wales, Scotland, Northern Ireland, the Isle of Man, Jersey, Ireland, Australia, Canada, the Cayman Islands, British Virgin Islands, South Africa, New Zealand and various other territories.

The office holder will apply to the court in his home jurisdiction in order that the home court sends a letter of request for assistance to the Royal Court. The Royal Court will generally not have any discretion to accede to the request unless by doing so it offends public policy or the outcome is oppressive. The leading case within the Bailiwick of Guernsey is The liquidator of Seagull Manufacturing Company Limited -v- Colin and Susan Slinn (Guernsey Court of Appeal, August 1991) where an English liquidator sought a private examination of the directors of an English registered company who were resident in Alderney under section 236 of the 1986 Act. It was held that he was able to do so because section 426(5) confers an authority on the court in Guernsey/Alderney to apply the insolvency law of either Guernsey/Alderney or the foreign jurisdiction in relation to comparable matters falling within its jurisdiction.

In Guernsey, the Royal Court has the power to give directions to a liquidator to assist in the performance of his functions, and this would include ordering the private examination of directors and officers of the company if appropriate. Accordingly, if similar requests were made by courts of jurisdictions to which section 426 has been extended, it is likely that the Royal Court would accede to those requests as long as the relief sought is not contrary to Guernsey insolvency law or where Guernsey insolvency law has a comparable remedy available to insolvency practitioners or creditors of a locally registered company.

The Common Law

Section 426 only applies to the various designated jurisdictions and office holders from those jurisdictions still have to make the initial application to their home court for the letter of request to be sent to the Royal Court, which can potentially be more expensive and time consuming.

The common law, however, offers an alternative route for foreign insolvency practitioners seeking recognition in Guernsey, through the "sufficient connection" test as first seen in the English case of Schemmer and others -v- Property Resources Limited [1975] Ch 273. The Guernsey case of Roy Terry Junior and Durette Bradshaw Plc -v- Bank of Butterfield (Guernsey) Limited (2006) used and applied the "sufficient connection" test for the first time in Guernsey. As with Schemmer, the Royal Court in Terry held that there is a sufficient connection where (i) the office holder is appointed in the jurisdiction where the company is incorporated or individual domiciled and (ii) if the defendant submits to the jurisdiction by whose order the appointment was made. It also held that there might be a sufficient connection where (iii) the order of the foreign court is recognised by the law of the place where the company is incorporated, or (iv) the office holder is appointed in a jurisdiction where the management and control of the company is exercise or where it carries on business. In Terry, the Royal Court granted recognition under heads (iii) and (iv) above.

Even if there is a sufficient connection, the Royal Court still has discretion whether to grant the relief sought, although unless there is good reason to the contrary (such as a breach of public policy), this discretion will generally be exercised in favour of recognition of office holders in Guernsey. The Royal Court has since exercised its discretion in favour of recognition of US appointed receivers, UK appointed liquidators, UK appointed trustees in bankruptcy in Guernsey and South African trustees of an insolvent estate.

Once recognised under the common law, the Royal Court is able to assist the foreign appointed insolvency practitioner in granting a wide variety of remedies such as ordering the delivery up of assets, the examination of directors and officers, injunctive and ancillary relief and costs.

Conclusions

It is relatively easy for a foreign appointed insolvency practitioner to seek recognition in Guernsey and the two alternative routes provide viable and cost effective options for the officer holder in order to enable him to maximise the performance of his functions.

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 Mondaq.com.

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

 
In association with
Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must 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

Mondaq.com (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 www.mondaq.com

To Use Mondaq.com 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.

Disclaimer

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.

General

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