Protected cell companies in Guernsey
This briefing note describes the key features of a protected cell company (PCC) and summarises the formation, structure and the liquidation procedures particular to this type of company. Essentially, a PCC consists of a core and of separate and distinct cells. The assets and liabilities of one cell are segregated and protected from those of the other cells. Similarly, the assets and liabilities of the core are segregated and protected from those of the cells. For investment funds, the attraction of a PCC is the avoidance of any cross-class contagion if a class or portfolio within an umbrella fund becomes insolvent and if the creditors attempt to enforce judgments against assets within other classes. Insurance companies have found the PCC structure attractive for use by rent-a-captives, transformers and a range of other ART solutions. There has also been a number of CAT bond issues and the securitisation of life business within individual cells of a PCC.
The principle is that where any liability arises that is attributable to a particular cell or to the core, the cellular assets attributable to that cell or the core assets attributable to the core should be used in satisfaction of the liability. Thus, when considering a liability attributable to a cell, the core assets and the assets attributable to any cell other than the cell to which the relevant liability is attributable are ‘protected assets’.
A PCC must inform any person with whom it transacts that it is a PCC and must identify or specify the cell in respect of which such person is transacting. In this way, creditors are notified of the limited recourse they have to the assets of a PCC…
Click on the link below to read the rest of the Carey Olsen 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 Carey Olsen
News from The Lawyer
Briefings from Carey Olsen
Accelerated timetable for amalgamations, migrations and takeovers.
Recently a market has developed for hedging longevity risk through the global reinsurance market.