Historically, Jersey’s creditor-driven insolvency process has been a process whereby the Viscount is appointed to wind up a company and distribute assets.
In February 2022, the States Assembly approved amendments to the Companies (Jersey) Law to enable a creditor of an insolvent company to apply to the Royal Court of Jersey for that company to be placed into creditors’ winding up (CWU). A summary of the changes are detailed below:
Application
A creditor applies to the Jersey Court for the CWU if the creditor has claim against the company for not less than £3,000; and
- the company is unable to pay its debts;
- the creditor has evidence of the company’s insolvency; or
- the creditor has the consent of the company to make the Application.
Except in exceptional circumstances, a creditor must provide the company with 48 hours’ notice of the Application.
A creditor must not make the Application if it has agreed not to do so and/or if the claim relates to the repossession of goods.
Provisional liquidation
The Court may appoint a provisional liquidator and equip with specific powers. On the appointment of the liquidator, no action must be taken or proceeded with against the company except with the permission of the Jersey Court.
Application Success
If successful, the Jersey Court will order the CWU and:
- order that the CWU commences from the date that the Application was made, or such other date, and;
- appoint a nominated person as the liquidator.
Within 14 days of the appointment notice should be given to the JFSC, the Viscount and the directors and creditors of the company. The liquidator must also advertise the order in the Jersey Gazette.
Creditor Risks
If a CWU order is made and the company was not insolvent at the date of Application, the company has a right of action against the creditor to recover damages in respect of any loss sustained by the company consequently unless the creditor is deemed to have acted reasonably and in good faith.
Terminating the CWU
The company may, during the CWU period, apply to the Court to terminate the CWU.
The application will be refused if it is not satisfied that the property of the company is sufficient to pay in full all claims filed with the liquidator or claims which the liquidator has been advised will be filed within the period.
These Amendments came into force on 1 March 2022 and further reinforce Jersey’s as a leading international finance centre, protecting the interests of creditors and assist with debt recovery actions in Jersey.
The above is a summary of the subject matter and provided for information purposes only. It is not aimed to provide legal advice, and before acting, further advice should always be sought from an appropriate suitably qualified professional. Forward Group are not liable for any errors, misprint or misinterpretation of any of the matters set out above.
Further details on this matter and the detailed documents can be downloaded from the following sources:
Consultation process: https://www.gov.je/government/consultations/pages/creditorwindup.aspx
Statutory demand document: https://www.gov.je/Government/NonexecLegal/Viscount
Law paper: https://www.jerseylaw.je/laws/current/Pages/04.160.aspx