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Preference
Under Article 17A of the Jersey Bankruptcy Law and Article 176A of the Jersey Companies Law, the jersey court may,
on the application of the Viscount (in the case of a company whose property has been declared
en désastre
) or liquidator
(in the case of a creditors’ winding-up), set aside a preference (including any Note Guarantee or security interest) given
by the company to any person (the “other party”). There is a 12-month look-back period from the date of commencement
of the winding-up or declaration of
désastre
during which transactions are susceptible to examination pursuant to this
rule (the “relevant time”). The Jersey Bankruptcy Law and Jersey Companies Law contain detailed provisions, including
(without limitation) those that define what constitutes a preference, the operation of the relevant time and the effect of
entering into a preference with a person connected with the company or with an associate of the company.
Extortionate Credit Transactions
Under Article 17C of the Jersey Bankruptcy Law and Article 179 of the Jersey Companies Law, the Jersey court may, on
the application of the Viscount (in the case of a company whose property has been declared “
en désastre
”) or liquidator
(in the case of a creditors’ winding-up) make a broad range of orders, including to set aside a transaction for, or
involving, the provision of credit to the debtor company which is or was extortionate. There is a three-year look-back
period from the date of commencement of the winding-up or declaration of
en désastre
during which transactions are
susceptible to examination pursuant to this rule. The Jersey Bankruptcy Law and Jersey Companies Law contain further
provisions, including (without limitation) those that define what constitutes a transaction which is extortionate and a
presumption that, unless the contrary is proved, a transaction examined under this rule is extortionate.
Disclaimer of Onerous Property
Under Article 15 of the Jersey Bankruptcy Law, the Viscount may within six months following the date of the
declaration of
en désastre
,
and under Article 171 of the Jersey Companies Law, a liquidator may within six months
following the commencement of a creditors’ winding-up, disclaim onerous property of the company. “Onerous property”
is defined to include moveable property, a contract lease or other immoveable property if it is situated outside of Jersey
that is unsaleable or not readily saleable or is such that it might give rise to a liability to pay money or perform any other
onerous act, and includes an unprofitable contract.
A disclaimer operates to determine, as of the date it is made, the rights, interests and liabilities of the company in or in
respect of the property disclaimed but shall not "except so far as is necessary for the purpose of releasing the company
from liability, affect the rights or liabilities of any other person". A person sustaining loss or damage in consequence of
such a disclaimer is deemed to be a creditor of the company to the extent of the loss or damage and shall have standing
as a creditor in the
désastre
proceedings
or creditors’ winding-up. The Jersey Bankruptcy Law and Jersey Companies
Law contain further provisions on the detail of this power to disclaim onerous property.
Fraudulent Dispositions
In addition to the Jersey statutory provisions referred to above, there are certain principles of Jersey customary law (for
example, a Pauline action) under which dispositions of assets with the intention of defeating creditors’ claims may be set
aside.
Administrators, Receivers and Statutory and Non-statutory Requests for Assistance
The U.K. Insolvency Act 1986 (either as originally enacted or as amended, including by the provisions of the Enterprise
Act 2002) does not apply in Jersey and the appointment of receivers, administrative receivers and administrators under
those Acts is not part of the laws of Jersey. Accordingly, the Jersey courts may not recognize the powers of an
administrator, administrative receiver or other receiver appointed in respect of Jersey situs assets.
However, under Article 49(1) of the Jersey Bankruptcy Law, the Jersey court may assist the courts of prescribed
countries and territories in all matters relating to the insolvency of any person to the extent that the Jersey court thinks fit.
These prescribed jurisdictions include the United Kingdom. Further, in doing so, the Royal Court may have regard to the
UNCITRAL model law.
If the request comes from a non- prescribed country or territory, then customary law and principles of comity and
reciprocity will be considered by the Royal Court by virtue of its inherent jurisdiction. If insolvency proceedings are
afoot in another jurisdiction in relation to the company, the nature and extent of the cooperation from Jersey is likely to
depend on the nature of the requesting country’s insolvency regime. If the requesting country adheres to principles of
territoriality, as opposed to universality, and, for instance, ring-fences assets for local creditors, full cooperation is highly
unlikely. If, however, the jurisdiction applies similar fundamental principles to those applied in Jersey, the Royal Court's
