The Royal Court has recently handed down the final decision in the matter of Eagle Holdings Limited (in compulsory liquidation).[1] In this decision, the Royal Court of Guernsey provided guidance and assistance to the joint liquidators regarding a distribution of surplus funds.
Introduction
Meetings of creditors and shareholders
Reporting delinquent officers
Declaration of solvency
Disclaiming onerous property
Comment
Historically, Guernsey's insolvency law had limited operational provisions (compared to English law) and was largely developed by a bespoke and flexible application of common and customary law principles by the Royal Court. The old regime will now be updated and revised by the Companies (Guernsey) Law, 2008 (Insolvency) (Amendment) Ordinance 2020 (Ordinance) which was passed on 15 January 2020. Although it does not yet have force of law it is anticipated to become law in the latter part of this year.
The recognition of the powers of an English trustee in bankruptcy in Guernsey is generally pursued either by way of a letter of request issued by the foreign court pursuant to section 426 of the Insolvency Act 1986 (Insolvency Act) or by way of an application via the common or customary law.
The recent decision from the Guernsey Royal Court in DM Property Holdings (Guernsey) Limited (in Liquidation)(1) is of fundamental importance to Guernsey insolvency practitioners as it provides cautionary guidance on the practical implications of Practice Direction 3/2015.
Imagine that your partnership is on the cusp of concluding a large transaction which has the potential to be immensely profitable. The partnership agreement does not include a fixed term for the partnership, and can instead be terminated on one partner giving notice to the others (referred to as a “partnership at will”).
In Bailey & Others (Joint Liquidators of D&D Wines International Limited) v Angove’s Pty Limited1, the Court of Appeal overturned a decision of the High Court, and so permitted the liquidator of an insolvent agent to recover funds due to it from end-customers despite the agency having been terminated.
Background
The global crisis and the rights of foreign creditors of Sovereign States
The global financial crisis has been well documented in the press, with one recent headline in The Times reading “Like Iceland, Ireland can refuse to pay up”. Claims that States face bankruptcy not unnaturally raise the alarm bells for the financial markets. Can States be sued if they default in payment? RPC recently enforced a claim against assets of an EU State, as discussed below...
Bankrupt States: A misnomer