Introduction
Jersey entities have proved popular as vehicles for a wide variety of asset holding structures, such as those holding real property. The modern legal framework and tax neutral regime are attractive to professionals structuring transactions for their clients. As a consequence, lending institutions are frequently requested to put in place credit arrangements for Jersey entities. To protect its position in these circumstances, a lending institution needs to be aware of the material differences that exist between English law and Jersey law.
The credit crunch has put pressure on a wide range of structures, resulting in lenders, borrowers and other counterparties looking more closely at the impact of possible insolvency proceedings. As Jersey companies are often used in cross-border finance transactions, it is important to be aware of the differences between Jersey and English insolvency procedures.
Main insolvency procedures
The main insolvency procedures for a Jersey company include:
In a recent trilogy of decisions concerning the high-profile insolvency of Jersey company Orb arl and its sole shareholder Gail Cochrane, the Royal Court of Jersey provided a clear endorsement of the capability of the Jersey insolvency regime to deal with complex cross-border insolvency matters. This update considers some of the salient points from the saga so far.
The three Royal Court decisions are as follows:
As a jurisdiction, Jersey is at the heart of cross-border insolvency and restructuring. Inevitably, situations arise where insolvent companies' assets or possibly important evidence are located overseas or an overseas liquidation regime would be best for creditors. Conversely there will be situations where a foreign insolvency process will require steps to be taken in Jersey.
The high profile insolvency of Jersey company Orb a.r.l (Orb) and its sole shareholder Dr Gail Cochrane (Dr Cochrane), a local GP, has firmly placed Jersey's insolvency regime in the spotlight. The matter commenced in late 2016 and has continued to build throughout the course of 2017 and 2018, with related proceedings in the BVI and before the High Court in England and interested parties ranging from the Serious Fraud Office to law firms.
The Royal Court in Jersey has a varied and challenging workload. The cases that have come before it this quarter certainly live up to that description. Here we discuss just a handful of cases that the Royal Court has determined, that, whilst in some respects are unremarkable, in other respects serve to illustrate the breadth of the experience that the Royal Court judiciary possesses.
Representation of Private Equity Fund Finance Limited [2018] JRC 194
This case considers the ability of the Court to ensure that similarly ranked creditors of a debtor are treated equally prior to the commencement of any insolvency procedure including a just and equitable winding up application.
Background
Mr Breifne O'Brien lives in Ireland. In 2008 and 2009 a number of creditors in that jurisdiction obtained judgments against him in the Irish High Court. The Irish Court injuncted Mr O'Brien from dealing with his assets within or without the jurisdiction below €20,000 million.
Ogier has successfully applied for the recognition by the Royal Court of Jersey of English fixed charge receivers. The decision of the Court in Re Estates and General Developments Limited1 is the first time that such an appointment has been recognised in Jersey.