The credit crunch has put pressure on a wide range of structures, resulting in lenders, borrowers and other counterparties looking more closely at the impact of possible insolvency proceedings. As Jersey companies are often used in cross-border finance transactions, it is important to be aware of the differences between Jersey and English insolvency procedures.

Main insolvency procedures

The main insolvency procedures for a Jersey company include:

In a recent trilogy of decisions concerning the high-profile insolvency of Jersey company Orb arl and its sole shareholder Gail Cochrane, the Royal Court of Jersey provided a clear endorsement of the capability of the Jersey insolvency regime to deal with complex cross-border insolvency matters. This update considers some of the salient points from the saga so far.

Overview

The three Royal Court decisions are as follows:

Introduction

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.

Background

Facts
Decision
Comment

Facts

An application had been made by the Bank of Scotland Plc and the governor and company of the Bank of Ireland for a letter of request to be sent by the Royal Court of Jersey to the High Court of England and Wales in respect of four Jersey companies that were ultimate beneficial owners of English real estate.

This case considers the ability of the Court to ensure that similarly ranked creditors of a debtor are treated equally prior to the commencement of any insolvency procedure including a just and equitable winding up application.

Background

Mr Breifne O'Brien lives in Ireland. In 2008 and 2009 a number of creditors in that jurisdiction obtained judgments against him in the Irish High Court. The Irish Court injuncted Mr O'Brien from dealing with his assets within or without the jurisdiction below €20,000 million.

Ogier has successfully applied for the recognition by the Royal Court of Jersey of English fixed charge receivers.  The decision of the Court in Re Estates and General Developments Limited¹ is the first time that such an appointment has been recognised in Jersey.

IMMOVABLES

There are two principal insolvency procedures by which a lender can bring about the realisation of a property in Jersey, namely dégrèvement and désastre. 

A debtor who fears that his property is going to be taken for his creditors either by way of a dégrèvement or by way of a désastre can apply to the Royal Court for a "Remise de Biens".  A remise grants a debtor time to get his affairs in order and effect an orderly sale of all or some of his property thereby enabling him to retain that which he can afford.

Introduction

With the March quarter day fast approaching it is likely that there will be more businesses becoming insolvent. Some of those businesses will have an interest in Jersey property.  For example as owners of Jersey property or holders of a lease of retail premises situated in the Island.