Answer ... (a) Debtor
A debtor is required to aid the viscount in the realisation of the debtor’s property and the distribution of the proceeds among the creditors to the utmost of the debtor’s power.
(b) Directors of the debtor
The directors’ powers will generally cease in a désastre or a CWU. The directors have a duty to cooperate with the viscount or liquidator.
(c) Shareholders of the debtor
The role of a shareholder is limited. In a shareholder CWU, the shareholders will vote to commence the CWU and vote on who should be proposed as liquidator.
(d) Secured creditors
In a shareholder CWU, the creditors (secured and unsecured) will be given the option to vote on the liquidator to be appointed. In a court-ordered CWU, the creditor that made the CWU application can nominate a liquidator.
Perfected security granted under the SIL will remain valid and enforceable despite the commencement of the désastre or the CWU and a secured creditor may enforce security granted under the SIL.
If a secured creditor does not enforce its security, it will be entitled to be paid out of the proceeds of sale of the secured assets, less the fees of the viscount or the liquidator incurred in respect of that sale. A secured creditor may prove for any shortfall in the désastre or the CWU as an unsecured creditor.
(e) Unsecured creditors
Unsecured creditors will need to prove for their debt and will receive a distribution only once all secured and priority creditors have been paid in full.
(f) Administrator
There is no concept of administration in Jersey.
(g) Employees
Employment contracts will terminate automatically on a CWU or désastre, although they may be continued by agreement between the liquidator or the viscount (as applicable) and the employee. Employees are priority creditors for up to six months of arrears of salary plus any outstanding holiday pay and bonuses.
(h) Pension creditors
It is likely that arrears of employer pension contributions will fall within an employee’s claim for salary arrears and constitute a priority claim, limited to six months of unpaid contributions.
(i) Insolvency officeholder
In a désastre, the viscount controls the procedure and is responsible for the realisation and distribution of the debtor’s assets. In a CWU, the liquidator will take over the management of the company and is responsible for the realisation and distribution of the debtor’s assets.
A liquidator and the viscount are under a duty to investigate the debtor’s affairs and report any misconduct.
(j) Court
The court will consider applications from the viscount or the liquidator in respect of antecedent transactions or for wrongful or fraudulent trading or for various other orders.
The court retains a general supervisory jurisdiction over the viscount’s conduct of a désastre and a liquidator’s conduct of a CWU and has the power, on application, to appoint or remove a liquidator. Creditors may apply to the court for review of certain decisions of the viscount or a liquidator.