This briefing looks at the potential impact of the coronavirus COVID-19 on businesses and examines steps that can be taken by stakeholders and directors to recognise, manage and mitigate the risks. In particular, we look at: the potential impact on businesses; managing insolvency risk; considerations for directors; and considerations for lenders.
Global outlook for the coronavirus situation
With the States of Guernsey's approval yesterday of the Companies (Guernsey) Law, 2008 (Insolvency) (Amendment) Ordinance, 2020 (the "Ordinance"), Guernsey took a step towards further enhancing its reputation as a robust jurisdiction for restructuring and insolvency.
The High Court of Hong Kong refused to allow a Chapter 11 Trustee to disclose a Decision from Hong Kong winding up proceedings in the US bankruptcy court. The US proceedings were commenced to prevent a creditor from taking action following a breach of undertakings given to the Hong Kong court in circumstances where the company had no jurisdictional connection with the US.
Not for a long time has the importance of understanding and managing a director’s duties in times of financial distress been so overwhelming. Here, Carey Olsen partner David Jones and associate Tim Molton examine those duties in greater detail, particularly in relation to Guernsey’s company law.
Following our previous article, the Court of Appeal dismissed an appeal following the High Court deciding that a moratorium in relation to restructuring proceedings in Azerbaijan could not be extended in breach of the Gibbs rule, allowing two significant creditors to proceed with their claims in the English Courts.
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.
Despite the debtor's contention that his primary residence was in the United States, the Court held that it had jurisdiction to make a Bankruptcy Order following a petition presented by HMRC.
HMRC presented a bankruptcy petition against Robert Stayton on 30 May 2014 who owed approximately £653,640. The matter came before the court on a number of occasions before the final hearing, with judgment being handed down in November 2018.
A discharged Bankrupt had intentionally misled the Court as to his COMI being in England and Wales in order to obtain a Bankruptcy Order. Four years after the making of the Bankruptcy Order, the Court annulled it on the grounds that the Court did not have jurisdiction to make the Order in the first place.
Ashfords successfully acted for the Joint Trustees in Bankruptcy of Vincent Mascarenhas (deceased) in their application to discharge Freezing Orders, an Interim Charging Order and an Interim Third Party Debt Order obtained by creditors of the late Bankrupt in 2014. The Joint Trustees were not a party to the original proceedings but had standing to make the applications.
The Hong Kong Court have confirmed for the first time that a foreign voluntary liquidation is eligible for common law recognition and assistance in Hong Kong.
China Culture Media International Holdings Limited, incorporated in the BVI, was wound up on 9 May 2016. China Culture was the sole shareholder of Supreme Tycoon Limited, also incorporated in the BVI.