Jersey insolvency laws: ancient and modern
The current insolvency regime in Jersey can be traced back to the 18th century. The Bankruptcy (Desastre) (Jersey) Law 1990 (the Bankruptcy Law) has been amended over time, but is largely in the same form, and offers the same options as regards insolvent entities, as when it was introduced back in 1991. Further, some of the historic regimes which are still used today, such as remise des biens and degrevement, remain governed by laws dating back to the 19th century. Unsurprisingly, there have been repeated calls for the insolvency regime in Jersey to be overhauled and updated to incorporate procedures available in other jurisdictions. One particular criticism has been the lack of flexibility under the Jersey system, and the lack of more modern insolvency regimes, in particular administration.
The Royal Court of Jersey has had to consider how procedures available under the current regime can be applied to modern scenarios and the following cases demonstrate the pragmatic approach the Court is adopting in order to apply laws with ancient origins to modern problems.
One of the key criticisms of the Jersey regime has been that it has no rescue procedure in place such as those which are available in jurisdictions which allow for administration (save for remise des biens, although the criteria and procedure mean that it has little relevance to corporate insolvencies and is generally only used by personal debtors facing degrevement or desastre). The options available in Jersey are inevitably fatal to the entity concerned, and are generally perceived to be expensive and potentially detrimental to the interests of affected parties, principally the creditors. The Royal Court has, however, applied the ‘just and equitable winding up’ procedure under Article 155 of the Companies (Jersey) Law 1991 to put in place mechanisms which allow for businesses to trade out as part of a winding up process. While still fatal to the entity concerned by the nature of being a winding-up process, it does offer more flexibility to the insolvency practitioner appointed to seek to run the business, pending its disposal in such a manner as to ensure the interests of affected parties are protected…
Click on the link below to read the rest of the Mourant Ozannes briefing.
Sign in or Register to continue reading this article
It's quick, easy and free!
It takes just 5 minutes to register. Answer a few simple questions and once completed you’ll have instant access.Register now
Why register to The Lawyer
In-depth, expert analysis into the stories behind the headlines from our leading team of journalists.
Identify the major players and business opportunities within a particular region through our series of free, special reports.
Receive your pick of The Lawyer's daily and weekly email newsletters, tailored by practice area, region and job function.
More relevant to you
To continue providing the best analysis, insight and news across the legal market we are collecting some information about who you are, what you do and where you work to improve The Lawyer and make it more relevant to you.
News from Mourant Ozannes
News from The Lawyer
Briefings from Mourant Ozannes
Guernsey was the first jurisdiction to introduce the concept of a protected cell company but the Companies Law has effectively modernised it.
Top tips for dealing with a JFSC on-site examination; guidance on investment business on-site examinations and an important decision of the Royal Court concerning the information a party subject to regulatory action should be provided with.