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
The recent English judgment of System Building Services Group Limited¹ is an important decision for directors of offshore companies in 'soft touch' provisional liquidation, and highlights the importance of conducting a thorough analysis of the order appointing provisional liquidators for the purposes of ascertaining the scope of directors’ duties that apply during the course of their post-appointment restructuring efforts.
Alexandra Vinogradova v (1) Elena Vinogradova, (2) Sergey Vinogradov (BVIHCMAP 2018/052)
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.
In today’s insecure commercial lettings market, it is becoming increasingly common for landlords to take a significant rent deposit when granting a new lease and to enforce their rights under the rent deposit deed. This is putting the drafting and enforcement of rent deposit deeds under scrutiny. How do the parties to a rent deposit deed protect their positions when the landlord assigns the reversion to the lease?
If a company becomes insolvent or experiences a liquidity crunch, which necessitates a restructuring or resort to higher-risk financing arrangements, the directors should consider whether to commence formal proceedings to facilitate the restructuring or financing.
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.
Service area / Restructuring and Insolvency
Location / British Virgin Islands
Date / February 2019
This article considers how to challenge an act, omission or decision of an office-holder.
The right to bring a challenge derives from Section 273 of the BVI Insolvency Act 2003, which provides:
A person aggrieved by an act, omission or decision of an office holder may apply to the Court and the Court may confirm, reverse or modify the act, omission or decision of the office holder.
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.
How do you spot a zombie company?
Zombie companies walk amongst us. They shuffle along, failing to realise that they are undead, relying on the inaction of creditors and low interest rates to mask their fundamental lack of profitability, poor growth prospects and inability to service their debts. Denied a swift, clean demise, they endure a twilight existence that deprives their living competitors of capital and opportunities.