This article first appeared in FIRE magazine.
The Royal Court of Jersey may grant a winding up order on the grounds that it is just and equitable to do so pursuant to article 155 Companies (Jersey) Law 1991 (Companies Law). This can apply to a solvent or insolvent company. It is similar to the statutory powers of the English courts under section 122(1)(g) Insolvency Act 1986 (English Insolvency Act). Although the Royal Court will have regard to English case law in assisting their interpretation of "just and equitable", recent Jersey case law appears to have developed a much wider discretionary application. This has inevitably led to the widening of circumstances in which such an order will be granted in Jersey.
The main procedures for winding up a company in Jersey are:
a) En désastre
Pursuant to the Bankruptcy (Désastre) (Jersey) Law 1990, a debtor or a creditor with a liquidated claim of more than £3,000 may issue an application to the Royal Court seeking a declaration that a debtor's property is declared en désastre. Once the Royal Court has established that the company is unable to pay its debts as they fall due and exercised its discretion to declare its property en désastre, the company's assets vest in the Viscount of Jersey for the purpose of adjudication and distribution.
b) Creditors' winding up
This process is similar in nature to a creditor's voluntary winding up under the English Insolvency Act. However, despite its name, this process is initiated by a company's shareholders. It is not a process which can be initiated by creditors whose only available avenue to place a company into an insolvency procedure, at present, is via a declaration en désastre (although in some circumstances creditors may apply some degree of pressure on the directors/ shareholders to initiate this process as an alternative to a declaration en désastre). As discussed below, amendments to the Companies Law (which come into force on 1 March 2022) will provide a further avenue for creditors to initiate a winding up process. Pursuant to articles 156-186 of the Companies Law, this process is initiated by a company's shareholders passing a special resolution requiring a two thirds majority at a general meeting. The appointment of a liquidator is usually effective from a subsequent creditors' meeting or where there is no creditor nomination, by the shareholders at the general meeting.
c) Summary winding up
This procedure (under articles 145 to 154A of the Companies Law) is also initiated by a shareholder's special resolution. However, this procedure applies to solvent liquidations where a company has neither assets nor liabilities or if it has assets and all its directors declare solvency and affirming that the company's debts can be discharged in full (within six months from the start of the winding up).
Having regard to the above Jersey insolvency procedures, one can see how there may be circumstances in which they will neither be appropriate nor provide the best outcome for creditors in cases of insolvency. In those circumstances, the following individuals will have standing to issue an application seeking the winding up of a company on just and equitable grounds in accordance with article 155(2) of the Companies Law: the company, director(s), shareholder(s); the Chief Minister; the Minister for Treasury and Resources; or the Jersey Financial Services Commission.
In the recent case of Financial Technology Ventures and Others v ETFS Capital Limited and Graham Tuckwell, the Royal Court recognised that there is not an exhaustive list of all the circumstances in which it may be just and equitable to wind up a company in light of its wide discretion but recognised the following examples:
In addition to the above, other notable examples include:
Taking a recent case by way of an example, Re Betindex Limited (Betindex) involved a Jersey incorporated company operating an online gambling platform designed to resemble stock market investments but in respect of professional football players. Initially, the Royal Court sought the assistance of the English courts to place Betindex into administration (a procedure not available in Jersey) but once the English courts determined that administration would not achieve its purpose, it was ordered that the administration be discharged conditional on Betindex being placed into liquidation in Jersey through either a declaration en désastre or a just and equitable winding up. The Royal Court concluded it was appropriate to grant a winding up order on just and equitable grounds for the following reasons:
An important feature of a just and equitable winding up pursuant to article 155(4) of the Companies Law is the Royal Court's ability not only to appoint a liquidator but also its ability to direct the manner in which the winding up is to be conducted and "make such orders as it sees fit to ensure that the winding-up is conducted in an orderly manner". Unlike English courts, the Royal Court is not bound by statute to consider whether another remedy is available or whether a shareholder making such an application is acting unreasonably rather than pursuing another remedy, however, case law has made clear that the Royal Court will want to be satisfied that there are compelling reasons for a just and equitable winding up and that other available procedures are not appropriate. What is also clear from the abundance of case law is the Royal Court willingness to exercise a very wide discretion and grant an order on just and equitable grounds where the outcome will be more beneficial for creditors.
In accordance with the upcoming amendments to the Companies Law coming into force on 1 March 2022, a creditor will now have the option to issue a winding up application (initiated by a statutory demand) and to appoint a liquidator (or provisional liquidator) from a register of private sector insolvency practitioners maintained by the Viscount. This is a momentous development in the Jersey insolvency jurisdiction. It therefore remains to be seen how these amendments may affect the use of just and equitable winding up applications as they may alleviate creditor pressure previously applied on directors and shareholders (particularly in circumstances where creditors wish to be the driving force behind the winding up process with a steer on their preferred liquidator). In our view they will remain a flexible and useful tool to maintain value.
 In Re Leveraged Income Fund Limited  JRC 209, the Royal Court (at paragraph 10) noted that article 155 of the Companies Law is based on the English Insolvency Act which is why English authorities are of particular assistance.
 For example, see Re Draganfly Investments Limited  JRC103 / Re Betindex Limited  JRC 309
 For example, see Bisson v Barker  JRC 193
 For example, see Re Green Equity Limited  JRC 169A
 For example, see Re Belgravia Financial Services Group Limited  JRC 161
 For example, see Re Poundworld  JRC 042
 For example, see Re Collections Group  JRC 096
 For example, see Re Huelin-Renouf Shipping Limited  JRC 164
 For example, see Horizon Investments Limited  JRC 039
 Article 5(4) Companies Law
Section 125 English Insolvency Act
 Companies (Amendment No. 8) (Jersey) Regulations 2022
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