A recent matter which came before a strong Court of Appeal panel demonstrates that the BVI Court will continue to come to the aid of creditors pursuing unpaid debts and that they should not necessarily be deterred from pursuing a debt in the BVI even if the security over the debt is in issue.
This article first appeared in ThoughtLeaders4 FIRE Q1 2021 magazine.
It is important that trustees understand their obligations if their trust structure comes under financial stress. Helpfully, the Jersey courts have provided guidance on the principles applicable to 'insolvent' trusts, which is likely to be highly persuasive in other jurisdictions.
When is a trust insolvent?
What is a pre-pack?
Pre-pack is the term used to describe an arrangement whereby the sale of all or part of a company’s business and/or assets is negotiated and agreed before an insolvency practitioner (IP) is appointed, with the relevant documentation being signed and implemented immediately or shortly after the appointment is made.
Following the demise of receiverships, administration is the insolvency process most commonly used to achieve a pre-pack sale.
Why are pre-packs used?
Saisie (meaning "to seize") is a court driven, Guernsey customary law process, governed by the Saisie Procedure (Simplification) (Bailiwick) Order, 1952. It is a three stage post judgment process which enables a creditor to enforce their rights against the debtor's realty in Guernsey.
If you thought the popularity of CVA's had been overshadowed by restructuring plans you might have to think again and watch what happens in the coming months. As you will know from the press there are a number of high-profile retail CVA's which are being challenged by landlords – New Look and Regis to name just two.
The recent Accountant in Bankruptcy v Peter A Davies case examines how a family home is dealt with following sequestration of an individual. The sheriff's comments about the case suggest there could be room for improvement in the Bankruptcy (Scotland) Act 1985, to make the process clearer for everyone involved.
Case background
This article first appeared in Business Brief magazine, May 2021 edition.
Across the world, government support has kept insolvency rates down but as jurisdictions look to loosen restrictions and ease back into some kind of normality, governments can't foot the bill forever.
As financial support is withdrawn, restructuring, insolvency and corporate recovery practitioners will likely see a spike in activity, and offshore firms in the Channel Islands are braced for an increase in demand from clients.
Why use debt for equity swaps?
Why use Jersey?
What key initial issues must be considered in respect of a new Jersey holding company?
Rise of debt for equity swaps in Jersey
Jersey continues to be the offshore jurisdiction of choice for restructurings involving debt for equity swaps (particularly restructurings of UK and international corporate groups). But what makes Jersey so attractive for this type of transaction?