Introduction
This Guide explains the procedure for administration order proceedings in respect of Guernsey companies.
Administration orders
The purpose of administration orders
This Update provides an overview the recent changes to Guernsey's insolvency regime affecting voluntary liquidations.
Introduction
The Companies (Guernsey) Law, 2008 (Insolvency) (Amendment) Ordinance, 2020, which amends the Companies (Guernsey) Law, 2008 (the Companies Law) came into force on 1 January 2023. It is supported by the first set of Insolvency Rules (the Rules) which came into force on the same date.
This Update provides an overview of the key changes concerning voluntary liquidations.
Amendments to Guernsey's corporate insolvency legislation give liquidators more investigative powers and permit liquidators and administrators to set aside transactions at undervalue.
One of the most powerful investigative weapons in any liquidator's armoury is the ability to compel the production from third parties of information and documents regarding the affairs of the company. Until recently, the precise scope of the liquidator's ability to seek production of such information or documents in Guernsey has been uncertain, relying on ill-defined common law powers.
The Royal Court in Guernsey will soon be able to wind up foreign companies.
Recent changes to Guernsey's insolvency regime will mean that, for the first time, foreign companies can be compulsorily wound up in Guernsey.
Long-awaited amendments to Guernsey's corporate insolvency legislation will come into force on 1 January 2023.
Introduced by the Companies (Guernsey) Law, 2008 (Insolvency) (Amendment) Ordinance, 2020, the provisions are aimed at further improving and updating Guernsey's corporate insolvency regime. The amendments stem from a wide-ranging consultation finalised in 2017 and represent the most significant development of Guernsey's insolvency law since 2008.
The amendments introduce a number of key changes to the law:
Liquidation
Introduction
This Guide explains the procedure for administration order proceedings in respect of Guernsey companies.
Administration orders
The purpose of administration orders
The provisions for Guernsey companies to be placed into administration are set out in Part XXI of the Companies (Guernsey) Law, 2008 (the Law).
Introduction
This Guide explains the procedure for liquidation proceedings in Guernsey, which are separated into two types: (i) voluntary liquidation and (ii) compulsory liquidation.
Liquidation proceedings
Voluntary liquidation
The provisions for the voluntarily winding up a company under Guernsey law are set out in Part XXII of the Companies (Guernsey) Law, 2008 (the Law).
Commencement
The Supreme Court in Sevilleja v Marex Financial Ltd [2020] UKSC 31 has brought much needed clarity to the legal basis and scope of the so-called ‘reflective loss’ principle. The effect of the decision is a ‘bright line’ rule that bars claims by shareholders for loss in value of their shares arising as a consequence of the company having suffered loss, in respect of which the company has a cause of action against the same wrong-doer.
A recent decision of the High Court of New Zealand provides helpful guidance for insolvency practitioners on how aspects of the voluntary administration regime should operate in the context of the COVID-19 pandemic.
On 30 March 2020, the board of directors of EncoreFX (NZ) Limited resolved to appoint administrators to the company. By then, New Zealand was already at Level 4 on the four-level alert system for COVID-19.
The UK Court of Appeal has held that legal privilege outlasts the dissolution of a company in Addlesee v Dentons Europe LLP [2019] EWCA Civ 1600.
Legal advice privilege applies to communications between a client and its lawyers. The general rule is that those communications cannot be disclosed to third parties unless and until the client waives the privilege.