In this article, we provide a general overview of the insolvency and restructuring sectors in Jersey and Guernsey, followed by a practical update addressing the recent significant insolvency and restructuring developments in each island.
- An introduction to insolvency and restructuring in Jersey
- Recent developments
- An introduction to insolvency and restructuring in Guernsey
- Recent developments
REFERENCED IN THIS ARTICLE
- Companies (Jersey) Law 1991 (as amended)
- Bankruptcy (Désastre) (Jersey) Law 1990 (as amended)
- Companies (Amendment No. 8) (Jersey) Regulations 2022
- Equity Trust (Jersey) Ltd v Halabi (in his capacity as Executor of the Estate of the Late Madam Intisar Nouri) JCPC 2019/0119 (the Z Trust litigation)
- Representation of Betindex Limited  JRC 309
- Investin Quay House Limited v BUJ Architects LLP  JCA 299
- Companies (Guernsey) Law 2008 (as amended)
An introduction to insolvency and restructuring in Jersey
A legal system founded upon ancient Norman-French customary law principles and an island often invisible on a world map, Jersey might be mistaken for a sleepy and antiquated jurisdiction. This could not be further from the truth.
With more than 33,600 registered companies,1 in excess of 20 banks2 and a net assets value of more than £440 billion under administration by hundreds of regulated funds,3 Jersey's legal system demands a pragmatic, robust and sophisticated restructuring and insolvency framework
Corporate insolvency procedures
The two key pieces of legislation are the Companies ( Jersey) Law 1991 (CJL) and the Bankruptcy (Désastre) ( Jersey) Law 1990 (BDJL). The former is principally based on the United Kingdom's Companies Act 1985 and the latter is derived from Jersey's customary law.
Whether a Jersey company is deemed insolvent depends on whether it can pay its debts as they fall due. This is known as the 'cash flow' test. Unlike in other jurisdictions, for a company to be insolvent it is not necessary that the value of the company's liabilities exceed its assets, which is known as the 'balance sheet' test.
Prior to 1 March 2022, désastre proceedings brought under the BDJL were the only Jersey insolvency procedure for an insolvent company that may be started by a creditor. Where a creditor wanted to liquidate a company to try and recover what is owed, it must apply to the Royal Court of Jersey (the Jersey Court) for an order that the company's assets be declared en désastre (in disaster). In general terms, a successful application vests the assets of the company (wherever situated) in the hands of the Viscount of Jersey (the chief executive officer of the Jersey Court) (the Viscount), who will then facilitate the orderly and fair distribution of its assets.
There are two other Jersey procedures that may be used to liquidate an insolvent company: a creditors' winding up (CWU) and a winding up on just and equitable grounds. From 1 March 2022, the creditors' winding-up regime was expanded to include an application being made by a creditor (discussed further below). Prior to this, a CWU, despite its name, could only be initiated by the shareholders of a company.
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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.