The Court of Appeal of Jersey has now considered in an appeal against the Royal Court’s decision of 10 January 2018 the case of a UK trustee in bankruptcy (the “Trustee”), whose appointment had been recognised in Jersey by order of the Court and who had been authorised to obtain documents and/or information for particular purposes, who was later subject to coercive measures in his home jurisdiction requiring the disclosure of such material for different, unauthorised purposes (in this case an Information Notice issued by HMRC pursuant to Schedule 36 of the UK Finance Act 2008 (the “

The Supreme Court of Bermuda has confirmed once again its willingness to order Confidentiality Orders in cases that involve the administration of private trusts. In the 2018 case of In the Matter of the E Trust (the “E Trust”), Acting Justice, Shade Subair Williams (subsequently appointed as a Puisne Judge) reaffirmed previous rulings that private trust proceedings can be anonymized and heard privately in Chambers.

The Facts

A recent Federal Court decision puts administrators on notice that they must carefully consider the consequences of dealing with other people’s assets.

The decision of Justice Perram in White, in the matter of Mossgreen Pty Ltd (Administrators Appointed) [2018] FCA 471, highlights the care that administrators must take when administering property outside the scope of their authority.

In Mossgreen, administrators were appointed to a company that conducted a business that ran an auction house and gallery.

The Royal Court of Jersey was recently required to consider its approach when a trustee in bankruptcy appointed in a foreign jurisdiction (the “Trustee”), whose appointment has been recognised in Jersey by order of the Court and who has been authorised to obtain documents and/or information for particular purposes, is later subject to coercive measures in his home jurisdiction requiring the disclosure of such material for different, unauthorised purposes.

The Victorian Court of Appeal decides that the Corporations Act priority regime does apply to trading trusts.

The law is now clear. Or is it?

For the last two years and six days, insolvency practitioners and other stakeholders involved in the liquidation of trading trusts have been frustrated by what should be a very straightforward question.

If the company in liquidation carries on business through a trust structure, as many do, what is the order of priorities that the liquidator must apply when making distributions to creditors?

In the January 2018 edition of our dispute resolution and insolvency bulletin, we review eight cases from the BVI Commercial Court and BVI Court of Appeal from the past year. As most readers will be aware, the main non-legal news last year was that in September 2017, the British Virgin Islands were hit by category five hurricanes Irma and Maria which caused considerable devastation. The BVI Commercial Court temporarily relocated to St Lucia and impressively got back on its feet quickly in order to support the international financial services business of the BVI.

Introduction

On 4 September 2017, Her Honour Hazel Marshall Q.C., Lieutenant Bailiff, handed down judgment in the case of Carlyle Capital Corporation Limited (in Liquidation) and others v. Conway and others [2017] Civil Action No. 1510, one of the most anticipated judgments in recent Guernsey jurisprudence, and the first time that a Guernsey court has memorialised certain fundamental legal principles affecting directors and the companies they serve.

In March 2017, the States of Guernsey approved the reform of Guernsey’s insolvency laws, which afford greater protection to creditors and investors. The necessary legislative amendments are currently being drafted although the date of issue is yet to be determined.

Key changes proposed include:

It is common practice for company contracts to contain clauses, known as “ipso facto” clauses, which terminate or amend the contract (e.g. by accelerating payments) merely because a company has entered into a formal insolvency process.

In this case, the firm was instructed by the English liquidators of Arck LLP (in liquidation) to assist in the recovery of assets misappropriated from a large number of British investors and channelled through Jersey corporate and trust structures as part of a fraudulent collective investment scheme.