Directors’ concerns: facing insolvency and wrongful trading
During the lifetime of a company some of the most difficult problems that a director faces are encountered if the company is in financial difficulty: not yet unable to pay its bills and insolvent but with a possibility that it may get to that position. At that stage the decisions made by a director may affect not only the survival and future of the company but also the director’s own position.
The range of options for a Jersey company that is in financial difficulty is relatively limited. Jersey does not have any rescue regime or regime for the protection of companies in financial difficulty from their creditors. If a company becomes unable to meet its debts as they fall due, the main options available to it are:
insolvent winding up (a Creditors’ Winding Up) under the Companies (Jersey) Law 1991 (the Companies Law), a procedure which, despite its name, may be commenced only by the insolvent company; or
a declaration by the court that the property of the insolvent company is en désastre under the Bankruptcy (Désastre) (Jersey) Law 1990 (the Désastre Law), a bankruptcy procedure which may be initiated either by the insolvent company or by a creditor and which is by way of liquidation of the company’s assets to meet liabilities and dissolution…
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Briefings from Mourant Ozannes
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