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...

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