Jersey: Judicial Guidance For Directors

Last Updated: 18 January 2010
Article by Kai McGriele

The jurisdiction of the Royal Court pursuant to Article 155 of the Companies (Jersey) Law 1991 (the "Law") was examined by the court in the context of a winding up application on behalf of Poundworld (Jersey) Limited ("the Company") earlier this year. This article looks at the judgment of the court ([2009] JRC 42) in ordering that the Company be wound up on grounds that it was just and equitable to do so pursuant to Article 155.

The Company was incorporated in Jersey in 1982. It recently ran into financial difficulties and was deemed by insolvency specialists advising it to be insolvent. In these circumstances the Company was advised to proceed to a creditors' winding up pursuant to Article 160 of the Law. However further developments before the creditors' meeting was due to be held impacted upon this advice.

Difficult Situation

The Company found itself in a difficult situation and argued that special circumstances necessitated the court sanctioned winding up. The Company had two major assets. The first was its stock held by its shipper which was owed money in respect of shipping charges and was threatening to exercise a lien over the stock and sell it in order to satisfy its outstanding invoices. The shipper was intending to sell the goods at wholesale value, resulting in significantly less than the assets' true value being realised.

The remaining assets of the Company were situated in retail outlets in Jersey, the landlords of which were threatening to exercise a "droit de gage" (a type of lien particular to a landlord over movables within the premises) over the stock in the circumstances. The landlords similarly would be looking to sell the goods at wholesale rather than retail value depriving the Company of the full value of the assets.

The Company submitted that if a liquidator could be appointed quickly both the shipper and landlords would be likely to reach an appropriate agreement with the liquidator as it was an independent party subject to the control of the court. The liquidator could supervise the sale of the assets at retail value thus realising a greater return which would be in the interests of the creditors.

Against this background the Company submitted that it could not wait for the creditors meeting to be held and for the court to make an order that the Company be wound up immediately. To delay matters, it submitted, would prejudice the interests of creditors.

An Unusual Order

The court noted that it was being asked to grant an unusual order and that its statutory jurisdiction under Article 155 of the Law should be exercised cautiously in the ordinary case of an insolvent company as the Law itself provided the mechanism of a creditors' winding up under Article 160 of the Law. However with regard to the particular circumstances of the present case, the court appreciated that the best interests of the creditors would undoubtedly be served by the Company being able to realise the retail value of its assets in order to maximise the cash it could generate to satisfy outstanding debts to creditors. The court was acutely aware that even a short delay of the winding up of the Company could allow both the shipper and the landlords of the retail outlets to sell the assets within their possession at a wholesale price which would not be in the best interest of the creditors.

The court ordered that the Company be wound up on the grounds that it was just and equitable to do so together with the further order that notice of the winding up be provided "forthwith" to all creditors. All creditors were granted liberty to apply to the court so as to allow them the opportunity to be heard if desired.

The Royal Court took this opportunity to review the authorities on Article 155 in Jersey citing the cases of Re-Leveraged Income Fund Limited [Unreported Judgment 31 October 2002] and Jean v. Murfitt [Unreported Judgment 11 December 1996]. It is clear that as Article 155 of the Law is based upon a similar provision in the Companies Act of England that English authorities can inform a Jersey court in this area of the law. The court noted in particular that the categories of cases where a court can order a just and equitable winding up are not closed and the jurisdiction is a general one.

Robust Approach

The case demonstrates the Royal Court's robust approach in circumstances where a company requires its assistance. Directors of companies which become insolvent have to be mindful of the changing nature of their fiduciary duties as a company encounters liquidity problems and is threatened with insolvency. Whilst throughout the company's solvent existence the directors owe a general duty to the company to act honestly and in good faith in the best interests of the company, once the company becomes insolvent or is on the verge of insolvency the directors owe a duty to the company to act in the best interests of the creditors. In this context they should be aware of the ability to request the court's assistance to wind up the company swiftly if necessary to protect the interests of creditors.

This article first appeared in the summer 2009 issue of the Appleby Jersey's Resolution newsletter.

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.

In association with
Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
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
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.