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.
Winding up a Jersey trust company on just and equitable grounds
In the matter of Centurion Management Services Limited and Article 155 of the Companies (Jersey) Law 1991 [2009]JRC227
Introduction
This judgment of the Royal Court in Jersey illustrates circumstances in which the court has been prepared to exercise its jurisdiction to order that a company be wound up on the grounds that it is just and equitable so to do.
There has been a considerable amount of interest from clients recently on putting Jersey companies holding UK real property and other assets into English administration. Where a Jersey company and its creditors intend to rescue the company as a going concern, or English administration would achieve a better realisation for creditors than a désastre or a winding up, it may be advantageous to commence English administration.
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.
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.
Introduction
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").
A winding up on 'just and equitable' grounds is a fast evolving remedy which allows a company to avoid a désastre. As in England and certain other jurisdictions, it is a flexible tool, with certain generally accepted grounds for the court exercising its discretion to grant the remedy, such as the need for an investigation into the affairs of the company concerned. Unlike désastre, it is not dependent on the cash flow insolvency of the company concerned and the Royal Court has a broad discretion to tailor the powers it may grant a liquidator to the needs of the situation.
The rule that creditors generally cannot continue to sue a company once a winding up order has been made has been applied to companies being wound up on 'just and equitable' grounds. This is not explicit in the Companies (Jersey) Law 1991 but has been ordered by the Court to give efficacy to the process. One of the features of winding up is that it is generally regarded as better to marshall claims against the company through a liquidator-operated adjudication procedure.