The role of Jersey as a financial centre means that on occasions there will be a requirement for a foreign liquidator or an office-holder under bankruptcy legislation to obtain information or documentation from persons or companies located in the Island. There have been a series of recent court decisions establishing the appropriate levels of co-operation with other jurisdictions.

The Statutory Position:

The provisions governing the recognition of a foreign (including a UK) insolvency office holder under Jersey law are found in Article 49 of the Bankruptcy (Désastre) (Jersey) Law 1990 (the 'Law') and Article 6 of the Bankruptcy (Désastre) (Jersey) Order 2006 (the 'Order').

In the matter of the Representation of Gregory Branch and Lee Manning, Joint Liquidators of AAA Holdings Limited (in liquidation) [2009]JRC110

This judgment is of interest as being the first occasion on which the Royal Court in Jersey was asked to sanction the compromise of a claim under Article 170 of the Companies (Jersey) Law 1991 (the "Companies Law").

The liquidity crisis has increased the need for creative procedures to avoid sudden death bankruptcy in order to salvage existing value.

A Jersey company or a company incorporated elsewhere but administered in Jersey may become involved in insolvency procedures under Jersey law or the law of a jurisdiction outside Jersey.

1. Applicable Law

1.1.1 On 1 January 2011 Switzerland faced the dawn of a new era in litigation. Due to its federal state structure, until this date civil procedural law was regulated on a cantonal level with 26 civil procedure codes. Since 1 January 2011, the Swiss Civil Procedure Code (CPC) replaces the cantonal codes.

1.1.2 Interim measures are mainly governed by the CPC. In order to determine whether provisions other than the CPC are (also) applicable to an interim measure, the applicant has to check two issues:   

Belmont Park Investments Pty Limited v BNY Corporate Trustee Services Limited and another [2011] UKSC 38.

The Supreme Court has clarified the extent to which it is possible for a contract to provide for a company or individual to lose assets on insolvency.  

Summary

Well-established rules are unchanged, so landlords can still forfeit leases on insolvency. In other cases, if a transaction is entered into in good faith and for valid commercial reasons, it is likely to be upheld.

Nortel Networks UK Limited (the company) was a tenant under two leases. The company went into administration. The administrators occupied a small proportion of each of the premises to enable them to carry out the administration. Under the terms of both leases rent was payable quarterly in advance.

The landlord applied to the court for an order directing the administrators to pay the rent as an expense of the administration.

But is it GAME over?

Pillar Denton Ltd and Others v Jervis and Others [2014] EWCA Civ 180

Summary – What happened?

A group of the UK's largest landlords have successfully overturned previous High Court decisions that had allowed insolvent tenants to continue trading from their premises without paying rent. The landlords in this case, which involved the retailer GAME, have been allowed to recover £3,000,000 in outstanding rents from the period of the tenant's administration.

18 December 2013

[2013] EWCA Civ 1626

Court of Appeal (Rimer, Kitchin, Christopher Clarke LJJ)

Whether landlords' rights to seek specific performance of an agreement to surrender leases survived an intervening insolvency

English courts may, when making ex parte (without notice) orders in a court-appointed receivership, include a final order that the defendant pays the costs incurred in obtaining the order notwithstanding that it was not notified of the application for the order.