This briefing note provides an outline of the different processes of voluntary winding up and striking off under the Companies (Guernsey) Law, 2008 (as amended) (the “Law”).

Voluntary winding up

This briefing note provides an outline of the different processes of voluntary winding up and striking off under the Companies (Guernsey) Law, 2008 (as amended) (the “Law”).

Voluntary Winding Up

Fallout from the global pandemic continues to throw light on the responsibilities of directors in times of financial distress. This briefing examines those duties in greater detail, particularly in relation to Guernsey’s company law.

Decisions, decisions

Directors owe duties to the companies they serve and ordinarily discharge those duties with reference to the interests of the companies’ members as a whole.

This briefing note provides an outline of the different processes of voluntary winding up and striking off under the Companies (Guernsey) Law, 2008 (as amended) (the “Law”). It does not cover compulsory winding up or the specific provisions on winding up of protected cell companies and incorporated cell companies. Further information on the effect of the Law on the winding up of these company structures can be found in our separate briefing notes on those subjects.

Voluntary Winding Up

In March 2017, the States of Guernsey approved the reform of Guernsey’s insolvency laws, which afford greater protection to creditors and investors. The necessary legislative amendments are currently being drafted although the date of issue is yet to be determined.

Key changes proposed include:

Zone of insolvency - directors in the firing line

Happy New Year?

2018 saw a number of high profile insolvencies around the world, including in Guernsey. The climate for many sectors remains extremely challenging with the UK further hindered by continuing uncertainty around Brexit. EY's Profit Warning Stress Index hit its joint highest level for two years in the third quarter of 2018 with 68 UK quoted companies issuing profit warnings.

Introduction

Carey Olsen’s restructuring and insolvency team has succeeded in applying to the Royal Court for the restoration of K2 Insurance Limited (“K2”), a liquidated and dissolved company, enabling the company to subsequently recover a substantial asset. Advocate David Jones and Associate Harry Stirk acted for Ian Damarell of BDO Limited, the liquidator of K2.

The Facts

The Royal Court of Guernsey has issued a Practice Direction pertaining to the information required when applying for the appointment of an administrator or liquidator in Guernsey.

The Practice Direction

INTRODUCTION

The Royal Court of Guernsey has taken the welcome step of dedicating specific court time to company and insolvency matters.

THE PRACTICE DIRECTION

Our Restructuring and Insolvency team has had further significant success, recently securing the discharge of an administration order over a Guernsey Protected Cell Company to facilitate its voluntary winding up. The team, led by Guernsey based counsel David Jones and including associate Luke Sayer, acted for local insolvency practitioners Tim Le Cornu and Andrea Harris of KRyS Global. 

To our knowledge this is the first time that the Royal Court of Guernsey has ordered that an administration order in Guernsey be discharged so as to facilitate a voluntary winding up.