Just And Equitable Winding Up In Jersey- Who Will Take On The Role Of Liquidator?
Introduction
With most economies on the edge of, or else in recession, the
number of insolvency proceedings in a number of jurisdictions, will
undoubtedly increase. Jersey will be no exception, not only with
regard to local businesses facing difficulties, but also with
regard to Jersey entities that form part of broader financial
structures.
There have been two recent Jersey decisions concerning the
provisions of the Companies (Jersey) Law 1991 (as amended) (the
"Law") relating to winding up on just and equitable
grounds, which might become a fertile area involving court
appointed liquidators in Jersey given current economic
conditions.
Just and equitable winding up
Article 155 of the Law provides that the Royal Court can order
that a Jersey company be wound up on just and equitable grounds.
In the Matter of Belgravia [2008] JRC161 (23 September
2008) and Bisson v Bish & Others [2008] JRC193 (11
November 2008) confirm the basis on which the Royal Court will
exercise the jurisdiction. In short, both decisions demonstrate
that the Royal Court will in broad terms follow English principles
and authority (the respective statutory provisions being similar),
some of which has been considered in previous Royal Court
decisions.
The need for an investigation
Belgravia involved an application by three Jersey
companies which had various roles within a regulated collective
investment fund structure. The Belgravia group (ultimately held by
Barclays Private Bank and Trust Limited ("Barclays") as
trustee of a Jersey law trust) had been under regulatory scrutiny
by the Jersey Financial Services Commission ("JFSC").
Various directions had been issued by the JFSC in relation to
Belgravia ultimately resulting in (amongst other things) a
suspension of subscriptions and redemptions into the respective
Belgravia managed funds. Barclays had appointed Deloitte &
Touche LLP to investigate the financial position of the Belgravia
entities. Deloitte's report concluded that, in part, the
Belgravia group was insolvent. That, combined with fears of shares
being issued that would dilute Barclays' holding, further
raised the levels of concern at Barclays and the JFSC - both were
of the view that a full investigation into Belgravia's affairs
was required.
In considering the application (made by Barclays but in the name
of the Belgravia entities by representation), the Royal Court
referred to earlier decisions where it had held that the approach
to the circumstances in which Article 155 would be applied was to
be flexible. The Court identified the...
To continue reading
Request your trial