|What are the principal insolvency procedures for companies in your jurisdiction?||
Liquidation (winding up) and administration.
A Scheme of Arrangement procedure can also be used for a company to come to an arrangement with creditors.
|Are any of the procedures available on a provisional basis?||Yes. Compulsory liquidation can be made on a provisional basis.|
|What requirements are to be satisfied for the procedures to be pursued?||Compulsory liquidation
The main reasons are that a company is unable to pay its debts or that it is just and equitable to do so. A recent Guernsey case has also seen a company wound up because it failed to provide accounts to its members.
Voluntary liquidation - whether company is solvent or insolvent
The company must be insolvent and the Court must be satisfied that an administration order can either
(a) Ensure that the company survives or can be sold as a going concern or
Scheme of Arrangement
(a) Court to establish that it has jurisdiction to call meetings of creditors/members
|What is the procedure and how long typically does it take?||
Compulsory liquidation – no specific time and the Court does not tend to impose time limits.
Voluntary liquidation – no specific time limits
Administration – no timeframe as to how long an administration order remains in force. Court can set a time limit but rarely does so
Scheme of ArrangementThe process can be relatively quick, and will be reviewed on a case by case basis.
|Can any procedures be pursued without the involvement of the Court?||Yes. Voluntary liquidation is a process which can take place without the involvement of the Court.|
|What is the effect upon control of the company and its assets during those procedures?||
|Is there an automatic moratorium and if so when does it come into effect and what is its effect?||
No. There is no moratorium in either a compulsory or voluntary liquidation.
While the administration order is in force, no resolution may be passed or order made for the winding up of the company, and any application on foot for the company’s winding up shall be dismissed. No proceedings can be commenced or continued against the company except with the consent of the administrator or the leave of the Court, and if the Court gives leave, to such terms and conditions as the Court may impose. This is a creditor-friendly moratorium so that creditors with security and creditors with set off may enforce those rights notwithstanding the moratorium in place.
|Can companies be forcibly wound up other than when insolvent?||
The GFSC can make an application for the winding up of a company which will be granted if the Court is persuaded that the company should be wound up for the protection of the public or the reputation of the Bailiwick.
|To what extent are the procedures designed to facilitate a rescue of a company’s business?||
|Can the procedures be used to facilitate the sale of all or part of the insolvent company’s business?||Yes.
|To what extent do the courts in your jurisdiction lend assistance to overseas appointees (through recognition) and in what circumstances?||
Statutory recognition: Guernsey will provide judicial assistance in relation to insolvency matters to the courts of England and Wales, Scotland, Northern Ireland, the Isle of Man and Jersey.
However, the common law concept of “modified universalism” has been restricted following the 2015 Guernsey case of Re X (a bankrupt)
|Are there any limitations typically imposed in respect of the recognition of an overseas appointee?||Yes, if:
|What kinds of overseas appointees have been recognised in your jurisdiction?||Overseas administrators, liquidators, trustees in bankruptcy, regulatory court-appointed receivers and fixed charge receivers.|
|Do the courts in your jurisdiction assist in applications to subject a company incorporated in your jurisdiction becoming subject to an insolvency procedure in another jurisdiction?||Yes. The assistance described above is reciprocal. Under section 426 (as extended to Guernsey) reciprocity is only with the UK and Crown Dependency courts. Under the common law it is, in theory, with any court worldwide.|
|What are the principle forms of security taken in your jurisdiction in respect of movable and immovable property?||Movable property
|What is the effect on secured creditors of the commencement of an insolvency procedure?||
|Which creditors are preferred and to what extent?||Preferred debts include rent to a landlord, wages, accrued holiday remuneration, income tax and social insurance. Preferred creditors do not, however, have priority over secured creditors.|
|What is the position regarding the recoverability and quantum of liquidator’s fees and expenses of the insolvency procedure?||
|What if any categories of transaction can be avoided/set aside?||
|Who is responsible for seeking orders to set aside such transactions?||The liquidator (preferences) and the victims/creditors (Pauline Actions).|
Contributions to the liquidation estate and liability of officers
Can directors or shareholders be required to contribute to the liquidation estate?
|Yes, in the case of:
|What liability can directors or other officers attract in respect of an insolvent company?||See above.|
|In what circumstances can directors be disqualified as a consequence of a company being wound up?||