Guernsey: all potentially interested parties to be considered by the court when blessing a decision of trustees

In a decision that provides useful guidance for both trust and insolvency practitioners, the Guernsey Court of Appeal has upheld a decision of the Royal Court blessing a trustee’s decision to pay for the costs of refinancing a trust asset from the assets of a family trust. One of the key grounds of appeal concerned the solvency of the trust and more particularly, that because it was insolvent, the court lacked the jurisdiction to bless a decision proposed by the trustees. But the Court of Appeal unanimously held that the potential insolvency of the trust was not a bar to the court’s supervisory jurisdiction and that the interests of all those who may be interested in the assets of the trust had to be considered.

The appellants were the joint liquidators of four companies of a family trust. They claimed to be entitled to repayment out of the trust assets of loans of approximately £180m entered into by the former trustees, who were two of the respondents to the appeal. The former trustees had been replaced by a third respondent, who is the current trustee.

The status of the loans was the subject of separate proceedings in Guernsey and at the date of the Court of Appeal’s judgment, judgment in relation to the loans remained outstanding…

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