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Increasing cash flow pressure on many businesses has resulted in a heightened risk for directors that a company may be wrongfully trading and personal liability may then accrue to the directors.
Increasing cash flow pressure on many businesses has resulted in a heightened risk for directors that a company may be wrongfully trading and personal liability may then accrue to the directors.
Sale Hearing
On September 20, 2008, the Bankruptcy Court approved the sale of certain assets of Lehman Brothers Holdings Inc. ("LBHI") and Lehman Brothers Inc. ("LBI"),1 including those related to its Canadian Capital Markets and Investment Banking businesses, to Barclays Capital, Inc. ("Barclays"). The sale was approved despite the filing of over 80 objections raising a number of procedural and substantive issues. The Purchase and Sale Agreement was subsequently amended, and a clarifying letter filed, to address a number of the questions and concerns raised.
As a jurisdiction, Jersey is at the heart of cross-border insolvency and restructuring. Inevitably, situations arise where insolvent companies' assets or possibly important evidence are located overseas or an overseas liquidation regime would be best for creditors. Conversely there will be situations where a foreign insolvency process will require steps to be taken in Jersey.
The high profile insolvency of Jersey company Orb a.r.l (Orb) and its sole shareholder Dr Gail Cochrane (Dr Cochrane), a local GP, has firmly placed Jersey's insolvency regime in the spotlight. The matter commenced in late 2016 and has continued to build throughout the course of 2017 and 2018, with related proceedings in the BVI and before the High Court in England and interested parties ranging from the Serious Fraud Office to law firms.
The Royal Court in Jersey has a varied and challenging workload. The cases that have come before it this quarter certainly live up to that description. Here we discuss just a handful of cases that the Royal Court has determined, that, whilst in some respects are unremarkable, in other respects serve to illustrate the breadth of the experience that the Royal Court judiciary possesses.
Representation of Private Equity Fund Finance Limited [2018] JRC 194
In an important judgment published last week, the Royal Court of Jersey has provided guidance to trustees and other holders of fiduciary powers in relation to the exercise of powers when a trust is considered to be “insolvent”. Counsel in the case was unable to find any relevant authority on this subject in any other trusts jurisdiction, so this may well be one of the first cases to deal with this issue.
In a recent unreported decision, ENRC NV v. Zamin Ferrous Limited (2015) JRC 217, the Jersey Royal Court demonstrated its consent to ensuring that judgment creditors can enforce their judgments worldwide. In this case, the judgment creditor applied for an ex-parte order to freeze assets and to compel the judgment debtor to answer questions about its assets and assets held by its subsidiaries. The answers revealed two agreements had been entered into pursuant to which certain assets held by subsidiaries had been transferred to third parties.
Key Points
- COMI of Jersey companies held to be in England and Wales
- Argument of improper motive generally insignificant where purpose of administration can be achieved
The Facts