Background

The European Union (Insurance and Reinsurance) (Amendment) Regulations 2021 (2021 Regulations) will come into operation on 30 June 2021, giving effect to Directive (EU) 2019/2177 of the European Parliament and of the Council of 18 December 2019 (2019 Directive).

The 2019 Directive amends the Solvency II Directive (2009/138/EC), the MiFID II Directive (2014/65/EU) and the 4th Anti-Money Laundering Directive (2015/849/EU).

On 24 September 2020, the European Commission (the Commission) relaunched its Capital Markets Union project with the publication of its ambitious new initiative,"A Capital Markets Union for people and businesses – new action plan" (the Action Plan). The purpose of the Action Plan is to reduce the current fragmented approach in financial markets and to tackle some of the remaining barriers to a single European capital market.

William Fry understands that, on 30 January 2017, having regard for the recent implementation of the Solvency II regime, EIOPA's Board of Supervisors adopted a decision (the "Decision") which will replace EIOPA's General Protocol relating to the collaboration of the insurance supervisory authorities of the Member States of the European Union (March 2008 Edition).

We understand that the Decision with replace the General Protocol as of 1 May 2017 (and will be available on EIOPA's website shortly).

In the interim, the General Protocol (March 2008 Edition) continues to apply.

The liquidity crisis has increased the need for creative procedures to avoid sudden death bankruptcy in order to salvage existing value.

A Jersey company or a company incorporated elsewhere but administered in Jersey may become involved in insolvency procedures under Jersey law or the law of a jurisdiction outside Jersey.  

The role of Jersey as a financial centre means that on occasions there will be a requirement for a foreign liquidator or an office-holder under bankruptcy legislation to obtain information or documentation from persons or companies located in the Island. There have been a series of recent court decisions establishing the appropriate levels of co-operation with other jurisdictions.

The Royal Court of Jersey can receive requests from outside Jersey by courts prescribed under the Bankruptcy (Désastre) (Jersey) Law 1990 or based on principles of comity. This will commonly involve a Jersey company or any other company with assets or information situated in Jersey. Insolvency practitioners appointed under a law or by a court outside Jersey will have no authority, as a matter of Jersey law to act in Jersey. It is normal therefore for an application to be made for recognition of the appointment and authority to exercise powers in Jersey.

Introduction

There are two principal regimes for corporate insolvency in Jersey: désastre and winding-up. This Briefing seeks to highlight the major features of each and some of the differences between the two.  

Désastre

The law of désastre arose out of the common law of Jersey, although since 1991 the common law has only applied to the extent that express provision is not made in the Bankruptcy (Désastre) (Jersey) Law 1990 (the "Désastre Law").

Who may commence the process?

A Jersey company or one of its creditors may wish the company to be placed into administration in England under Schedule B1 of the UK's Insolvency Act 1986 (the "Act").

The liquidity crisis has increased the need for creative procedures to avoid sudden death bankruptcy in order to salvage existing value.

A Jersey company or a company incorporated elsewhere but administered in Jersey may become involved in insolvency procedures under Jersey law or the law of a jurisdiction outside Jersey.

The Royal Court of Jersey can receive requests from outside Jersey by courts prescribed under the Bankruptcy (Désastre) (Jersey) Law 1990 or based on principles of comity. Such requests may involve a Jersey company or any other company with assets or information situated in Jersey. Insolvency practitioners appointed under a law or by a court outside Jersey will have no authority, as a matter of Jersey law, to act in Jersey. It is normal, therefore, for an application to be made for recognition of the appointment of such practitioners and to authorise them to exercise powers in Jersey.