Jersey Companies and English Administration

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. There is no statutory procedure for this under Jersey law, although there are several cases in which the Royal Court of Jersey has exercised its inherent jurisdiction and issued a letter of request to the English court to facilitate making a Jersey company subject to English administration.

By way of background, an insolvent Jersey company may potentially become subject to Jersey insolvency proceedings such as a désastre or a creditors' winding up, each of which is a procedure for insolvent liquidation, as opposed to a rescue procedure such as English administration. There is no direct equivalent under Jersey law of English administration under Schedule B1 of the UK Insolvency Act 1986. Further, an insolvent Jersey company having its management and/or assets in a foreign jurisdiction may potentially become subject to foreign insolvency proceedings under the laws of the foreign jurisdiction. For example, a UK Law of Property Act 1925 receiver may potentially be appointed over the property of a Jersey company under the terms of an English law security agreement without involving any court (although it may be advisable for the receiver to obtain recognition in Jersey, as discussed in the section below on Jersey recognition of foreign insolvency proceedings).

Where a Jersey company's centre of main interests is in England, we understand from English cases including Re BRAC Rent-A-Car International Inc [2003] 2 All ER 201 and Re DBP Holdings Limited [2004] EWHC 1941 (Ch) that the English court has jurisdiction to hear a direct application to the English court for the administration of a non-English company (e.g. a Jersey company). A Jersey company's "centre of main interests" would be determined for these purposes in accordance with the EU Regulation on Insolvency Proceedings.

Nevertheless, where a Jersey company's centre of main interests is in England, it may still be advantageous to obtain a letter of request from the Royal Court to the English court for the commencement of administration for the following reasons:

obtaining a letter of request would ensure that the Royal Court would recognise the appointment of the English administrators of the Jersey company. It would be advisable for the English administrators to obtain recognition in Jersey where they need to deal with Jersey assets or take other steps in Jersey - please see the section below on Jersey recognition of foreign insolvency proceedings; it may be questionable whether the Jersey company's centre of main interests is in...