Introduction

In the context of insolvency, the principle of "modified universalism" (Universalism) is defined by Lord Sumption in Singularis Holdings v Prince Waterhouse Coopers as:

Carey Olsen is proud to have sponsored the 7th annual INSOL International Channel Islands Seminar which took place in Jersey on 14 September 2021.

The seminar, which provided a welcome opportunity for insolvency practitioners and advisers to reconnect in person, showed why Jersey and Guernsey remain leading locations for structuring complex financial transactions and for the secured lending market.

The following key points were amongst or relate to those discussed at the seminar.

No pandemic-driven barriers to enforcement

The Channel Islands of Guernsey and Jersey did not introduce emergency insolvency legislation as a result of the Covid-19 pandemic and do not presently have measures equivalent to those found in the UK’s Corporate Insolvency and Governance Act, 2020 (“CIGA”).

Introduction
Benefits of Jersey companies
Debt-for-equity swaps
Structuring issues
Comment

Introduction

Trilogy Management Limited v White Willow (Trustees) Limited and Others, 13 May 2021

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As financial support is withdrawn, restructuring, insolvency and corporate recovery practitioners will likely see a spike in activity, and offshore firms are braced for an increase in demand from clients. After that, there'll likely be lender enforcement resulting in formal insolvencies by the end of the year and into next year.

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?

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?