CIGA, Brexit And The Recognition Of Part 26A Restructuring Plans In Guernsey And Jersey

• Published date: 10 September 2021
• Subject Matter: Corporate/Commercial Law, Insolvency/Bankruptcy/Re-structuring, Financial Restructuring, Corporate and Company Law, Insolvency/Bankruptcy
• Law Firm: Walkers
• Author: Mr Fraser Hern, Sarah Brehaut, Adam Cole, Nigel Sanders, Jamie Bookless and Craig Macleod

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").

However, the High Court's consideration of whether so-called restructuring "super Schemes" under Part 26A of the Companies Act 2006 are "likely to be recognised in any key overseas jurisdictions which are material to its effectiveness" and, thus, whether they can be of "substantial effect in relevant jurisdictions outside England and Wales" is of particular interest offshore¹ .

This Walkers' briefing addresses issues that may be relevant to the recognition of foreign insolvency officeholders and restructuring plans by the Royal Court of Guernsey and the Royal Court of Jersey (the "Royal Courts").

Recognition of foreign officeholders

Despite the close and historical ties to the UK, neither Guernsey nor Jersey has ever been part of the European Union and, as such, the EU Insolvency Regulation has not been a relevant factor in questions of recognition or mutual assistance. Notwithstanding the wide-ranging effects of Brexit, the UK's departure from the European Union has not affected the Channel Islands' approach to assisting foreign officeholders.

It should also be noted that the Channel Islands are not signatories to the UNCITRAL Model Cross-Border Insolvency Law (the "UN Model Law") nor any other recognised international insolvency regime.

Statutory Regimes

In the United Kingdom, section 426 (4) of the Insolvency Act 1986 (the "UK Insolvency Act") requires UK courts to provide assistance to other UK courts or those from a "relevant country or territory" in matters relating to insolvency law. For the purposes of section 426, a "relevant country or territory" includes the Channel Islands and the Isle of Man² .

Section 426 of the UK Insolvency Act has been extended to the Guernsey by virtue of the Insolvency Act 1986 (Guernsey) Order 1989. This means that the Royal Court is mandated to assist the courts of England and Wales, Scotland, Northern Ireland and the other Crown Dependencies in relation to relevant insolvency proceedings.

In Jersey, Article 49 of the Bankruptcy (Désastre) (Jersey) Law 1990 (the "Désastre Law") confers a discretionary power on the Royal Court to assist foreign courts of a "relevant country or territory" in matters relating to insolvency, and when doing so may have regard to the UN...