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approach is more likely to be similar to the position where prescribed countries are involved.
In the case of both statutory and non-statutory requests for assistance, it should not be assumed that the UNCITRAL
provisions will automatically be followed. That is a matter for the discretion of the Royal Court.
Jersey does not form part of the European Union for the purposes of implementation of its directives. Accordingly, the
EU Insolvency Regulation does not apply as a matter of Jersey domestic law and the automatic test of centre of main
interests does not apply as a result.
Security in Insolvency
The enforcement of any security interest granted under the Security Interests (Jersey) Law 2012 (which would be the
appropriate law under which to take security over Jersey
situs
intangible movable property (eg. shares)) would need to
be in accordance with, and subject to the provisions of that Law, to the provisions of the relevant security agreement and
to all laws relating to bankruptcy, dissolution, insolvency, re-organisation, liquidation, moratorium or other laws of
general application affecting the rights of creditors generally.
British Virgin Islands
Insolvency Proceedings
The following summary of British Virgin Islands (“
BVI
”) law is limited to a consideration of the effect that the insolvent
liquidation of a BVI Company may have on a guarantee granted by that BVI Company.
The insolvent liquidation of a BVI Company is governed by the provisions of the Insolvency Act, 2003. A party, who
has standing, pursuant to the provisions of the Insolvency Act, 2003, may make an application to the BVI court for the
appointment of a liquidator to a BVI Company if it is insolvent (as defined in the Insolvency Act, 2003) or it is just and
equitable or in the public interest that a liquidator should be appointed. In terms of a BVI Company that has granted a
guarantee, and the guarantee has become enforceable as against the BVI Company, then if the creditor considers that the
BVI Company is insolvent, the creditor may apply to the BVI court for the appointment of a liquidator to the BVI
Company.
In the event of the appointment of a liquidator to a BVI Company pursuant to the provisions of the Insolvency Act, 2003,
from the commencement of the liquidation of the BVI Company, unless the BVI court otherwise orders, no person may
commence or proceed with any action or
proceeding against the BVI Company or in relation to its assets (in effect, the
appointment of a liquidator triggers an automatic stay of proceedings against the BVI Company) and no share in the BVI
Company may be transferred. However, the relevant provisions of the Insolvency Act, 2003 do not affect the rights of a
secured creditor (such as the holder of a fixed charge) to take possession of and realise or otherwise deal with assets of
the BVI Company over which the creditor has a security interest (ordinarily the debt due under a guarantee would be an
unsecured claim in the liquidation unless such debt is otherwise subject to security).
In addition, in the event of the insolvent liquidation of a BVI Company, the Insolvency Act, 2003 sets out a statutory
order in which the assets of the BVI Company are to be applied. If, before the commencement of the insolvent
liquidation of a BVI Company, a creditor of the BVI Company acknowledges or agrees that in the event of a shortfall of
assets he will accept a lower priority in respect of a debt than that which he would have otherwise had under the
Insolvency Act, 2003 that acknowledgement or agreement takes effect notwithstanding the provisions of the Insolvency
Act, 2003 except to the extent that a creditor of the BVI Company who was not a party to the agreement may be
prejudiced. Therefore, in the event of the insolvency of a debtor BVI Company, the provisions of the Insolvency Act,
2003 may conflict with and override the priorities of debts agreed to contractually between a debtor and one or more of
its creditors. In particular, in so far as the assets of the BVI Company were insufficient to pay the costs and expenses of
the liquidation in the prescribed priority and the preferential claims admitted by the liquidator, those costs, expenses and
preferential claims would have priority over (i) the claims of secured parties in respect of the assets of the BVI Company
(if any) which are subject to a floating charge created by the BVI Company and will be paid out of those assets; and (ii)
over the claims of unsecured creditors.
Under the laws of the British Virgin Islands, in the event of the insolvent liquidation of a BVI Company, any transaction
entered into by the BVI Company within the vulnerability period (which is the period of 6 months prior to the onset of
insolvency in the case of a transaction with an unconnected third party, or the period of 2 years prior to the onset of
insolvency in the case of a transaction with a connected person but note, in respect of extortionate credit transactions, the
period is 5 years prior to the onset of insolvency) may be subject to challenge by the appointed liquidator, if the
liquidator considers the transaction is an unfair preference, an undervalue transaction, a voidable floating charge or an
extortionate credit transaction and is thus voidable. For a transaction to be voidable as an undervalue transaction, an
