Jersey Insolvency and Asset Tracking

Jersey Insolvency and Asset Tracking

5th Edition

Authors: ,

ISBN: 978-1-901614-67-1

Publication date: 01/09/2016

Price: £195.00

JERSEY INSOLVENCY AND

ASSET TRACKING

 Fifth Edition 

by 

ANTHONY DESSAIN 

Advocate and Notary Public

of Bedell Cristin, Jersey Partnership

 and 

MICHAEL WILKINS, M.B.E.

Viscount of the Royal Court of Jersey 1981 - 2015

and Judicial Greffier 1997 - 2015 

 

Edited by Robert Gardner and Edward Drummond,

Advocates, both of Bedell Cristin, Jersey Partnership

and Ed Shorrock, F.C.A, of Baker & Partners 

 

ISBN 978-1-901614-67-1

Soft back 692 pages

 

FOREWORD TO THE FIFTH EDITION

 

This is the fifth edition of this very useful contribution to the law of Jersey.  The last edition showed the law as at 31 December 2011.

 I am told by the authors that since then there have been some 200 new developments in our law and practice, which makes the new edition especially valuable.

 So far, notwithstanding my foreword to the fourth edition, the 2012 Security Interests Law has not provided the number of cases one might have expected but then the 1983 Security Interests Law did not do so either.  Perhaps both pieces of legislation are so clear they brook no argument.

 A work of this kind makes a vital contribution to the overall package which an international financial centre should offer.  This is particularly so by describing some of our older insolvency procedures such as dègrévement which are special to Jersey and which are not instinctively familiar to clients and practitioners both in and outside the Island.

 I congratulate the authors and am pleased to commend it.

 

William Bailhache

Bailiff of Jersey

Royal Court of Jersey

 

  TABLE OF CONTENTS

 

Foreword to the First Edition

Foreword to the First Edition

Foreword to the Third Edition

Foreword to the Fourth Edition 

Preface to the Fifth Edition

Illustrations 

Principal Abbreviations  

Table of Jersey Cases 

Table of Jersey Legislation 

Table of English and Other Cases

Table of English Legislation 

Human Rights Cases

Table of International Conventions 

Glossary

  

PART 1 – MAIN TEXT

 

Chapter 1 - Introduction

 

Background

The Jersey Court System 

Sources of Jersey Law  

Formal Validity, Essential Validity and Capacity    

 

Chapter 2 - Asset Recovery and Claimants’ Rights Prior to and after 

                  Insolvency Procedures

 

Types of Property 

Types of Co-ownership

Usufructs and Leases

Types of Security

 Immovable Property

Hypothèque Conventionelle Simple   

Hypothèque Judiciaire

Hypothèque Légale   

Flats   

Long Leases  

Foreign Security   

Movable Property   

General Rule    

Tangible Property situated in Jersey    

Pledges  

Lien    

Non-Judicial - Landlord’s Right to Distrain     

Statutory Rights of Payment - Ship and Aircraft Dues    

Mortgages over Ships  

Leasing and Hire Purchase Agreements

Unauthorised Transfers of Movables and of those subject to Hire Purchase Agreements  

Aircraft   

Reservation of Title Clauses

Intangible Property situate in Jersey

Security Interests  

Security Interests and Bankruptcy 

Security Interests and Désastres

Security Interests (Jersey) Law 201- (the “new Security Interests Law”)

Purpose of the new Security Interests Law

Principal features of the new Security Interests Law 

Trust Property, whether Tangible or Intangible, situate in Jersey or Elsewhere

Foreign Security

Movables situate in Jersey   

Foreign Situate Movables    

Rights of Foreign Claimants    

Pursuit of Secured Claims  

Judicial

Non-Judicial   

Pursuit of Unsecured Claims  

Judicial   

Ordre Provisoire   

Claims against Property in Co-ownership  

Pursuit of Claims Generally

Commencement of Proceedings

Jurisdiction to Commence Proceedings or to Make an Application

Causes of Action  

Contract   

Tort Generally  

Specific Torts  

Fraud as a Tort

No Discharge for Fraud   

Fraud as a Criminal Offence under Common Law  

Comparison of Criminal and Civil Fraud   

Equitable Rights  

Background   

Constructive Trust Claims   

Remedial Constructive Trusts 

Unjust Enrichment and Restitution   

Immovable and Movable Property and Succession Rights  

Statutory Rights 

New Causes of Action and Certainty  

Le Criminel Tient Le Civil en État     

Remedies and Orders Available 

Tracing   

Interlocutory Orders

Interlocutory and Freezing Injunctions  

Ancillary Orders available against a Defendant 

Ancillary Orders available against Third Parties  

Express Undertakings  

Restricted Use of Discovered and Disclosed Documents  

“In Private” Hearings 

Enforcement of Judgments and Arbitration Awards  

Enforcement in Jersey of Jersey Judgments  

Enforcement in Jersey of Foreign Judgments

Enforcement Abroad of Jersey Judgments     

Enforcement in Jersey of Jersey Arbitration Awards  

Enforcement in Jersey of Foreign Arbitration Awards  

 

 Chapter 3 - Officers’ and Directors’ Duties and Liabilities

 

Types of Jersey Company, their Registered Office and Regulation    

Regulation and Compliance

Directors’ Duties

Generally

Maintenance of Accounting Records and Retention of Documents  

Directors of Corporate Directors

Controlling Directors’ Activities

Acting ultra vires and wrongly 

Collective Responsibility   

Shareholders’ Protection

Creditors’ protection  

Wrongful Trading    

Fraudulent Trading   

Disqualification Proceedings   

Criminal Liability    

Companies Law    

Désastre Law  

Regulatory Laws   

Common Law  

Appointment of Inspectors  

Indemnity for Civil and Criminal Liability 

  

Chapter 4 – Piercing the Veil

 

The Veil

Piercing the Corporate Veil  

Members’ Statutory Liability to Contribute  

Lifting the Corporate Veil    

Lifting the Corporate Veil – to protect assets  

Lifting the Corporate Veil – to obtain information about the beneficial owner of a company

Lifting the Corporate Veil – to obtain information about the affairs of a company

Trusts have no Veils to Pierce or Lift

 

 Chapter 5 - Bankruptcy

 

Section 1: Introduction 

Insolvency, Bankruptcy and the Anti-Deprivation Principle  

 

Section 2: Désastre

Désastre    

Origins and meaning

Statistics

Who may Commence?

Commencement by a Sole Creditor   

Commencement by the Jersey Financial Services Commission   

Requirements for Commencement and the Exercise of Discretion  

Who may be a Debtor?  

Individuals, some Companies and some Partnerships  

Other Companies  

Other Partnerships

Deceased Debtors    

Application for a Désastre  

Application Generally to be Heard in Open Court (Open Justice)  

Requirement for Liquidated Sum  

The Rôle of the Viscount and the Vesting of Assets

Vesting of Immovable Property   

Vesting of Movable Property    

Leases and Licences to Occupy  

Excluded Assets     

Rights of Action in respect of Injuries caused to the Person or Feelings of a Personal Bankrupt  

Pension Schemes  

Old Age Pension  

Liquor and Gambling Licences  

Liquor Licences    

Gambling Licences  

Medicinal Products  

Realisation of Assets  

Licitation

Investment of Sums Realised by the Viscount    

Derisory Offers    

Referential Bids    

Competing Offers    

Universality Principle  

After Acquired Property     

Duty to Investigate    

Legal Advice Privilege  

Funding Désastre Proceedings  

Special Position of the Matrimonial Home  

Status of Trust Assets

General Powers of the Viscount  

Agents of the Viscount  

General Duties of the Debtor  

Exceptional Position of the Viscount

Annual Returns  

 

Section 3: Winding up of Jersey Companies

 

 

Winding Up of Jersey Companies  

Who may Commence?   

Bar to Commencement  

Procedure for Commencement  

Procedure for Commencement of a Summary Winding Up and its Effect  

Procedure for Commencement of a Court Winding Up  

Procedure for Commencement of a Creditors’ Winding Up  

Appointment and removal of a Liquidator  

General Duties of a Liquidator    

General Rights and Powers of a Liquidator  

Vesting of Assets   

Trust Assets   

Contributions in respect of the Purchase or Redemption of Shares   

Contributions of Present and Past Members    

Duty to Co-operate

Delivery and Seizure of Property   

Legal Effects of Initiation of Désastre and Company Winding Up  

Effect on Directors’ Powers   

Automatic Stay of Proceedings and Effect on Arbitration   

Abolition of the Ten Day Rule - the Effect on Conveyances and Judgments

Treatment of Claimsin a Désastre and Company Winding Up  

Costs, Charges and Expenses  

 

Section 4: Désastres and Winding up - Similarities and Differences

 

 

Désastre or Winding Up - Some considerations   

Désastre or Winding Up - Where either is possible

Special Effects of Initiation of Désastre on Individuals   

Categories of Creditor    

Secured Creditors    

Harbour and Airport Dues  

Priority Creditors  

Unsecured Creditors  

Claims    

Time of Filing  

Proofs of Claim    

Foreign Currency Claims  

Adjudication  

Set Off (Compensation)   

Contractual Netting  

Purchases by Credit Card  

Extortionate Credit Transactions

Contingent Claims and Liabilities 

Claims for Performance   

Contractual and Other Subordination of Claims    

Fines as Claims

Hire Purchase

Subrogation of Claims  

Treatment of Foreign Creditors 

Competing Claims of Foreign Insolvencies   

Filing in a Désastre    

Overriding Claims    

Seeking Assistance in Jersey  

Interest    

Position of Shareholders 

Directions of the Court  

Meetings of Creditors   

Désastre    

Creditors’ Winding up  

Conduct of Proceedings 

Use, Sale, Lease or Disposal of Property  

Assignment of Rights of Action  

Third Parties’ Rights against Insurers

Disclaimer of Onerous Property    

Unprofitable Leases and Sub-leases  

Annulment of Leases   

Borrowing    

Powers of Attorney   

Voidable Transactions  

Transactions at an Undervalue  

Preferences     

Unperfected Security  

Invalid Trusts and Invalid Transfers to Trusts  

Excessive Pension Contributions   

Wrongful and Fraudulent Trading  

Wrongful Trading    

Fraudulent Trading 

Common Law and Other Statutory Claims  

Fraudulent and other claims generally

Improper Use of Share Capital    

 

Section 5: Dégrèvement and Réalisation

 

Dégrèvement and Réalisation    

Introduction  

Who may apply?

Requirements

Preliminary Procedure  

The Dégrèvement Hearing

Practical Considerations

Vacant possession

Discharge

Surplus

Guarantors

Servitudes

Abolition of Dégrèvement

Table of Completed Cases and Statistics

Réalisation

Procedure

Practical considerations

 

Section 6: Debtor Protection Procedures

 

 

Remise de Biens    

Who may apply?  

Requirements    

The application  

Considerations    

Foreign Immovable Property

The decision   

Application granted 

Application Refused/Remise Fails

Discharge

Costs in a Remise

Practical considerations  

Table and Statistics

Cession Générale (cession de  biens)  

Involuntary cession

Who may apply?  

Requirements   

Implicit voluntary cession

Voluntary cession

Procedure 

Considerations

Discharge

Practical Considerations

Procedure following cession

Décret 

Effects of the Alternative Bankruptcy Procedures in the Context of Discharge

Other Debtor Protection Procedures

Stay

Who may apply

Requirements

Application

Recall of a Désastre

Who may apply?

Application  

Requirements for Recall  

An Alternative Approach by way of Appeal  

Recall or Appeal?     

Other Appeals?  

Judicial Review?

Seeking Damages for a Wrongful Declaration 

Statutory or d’Allain Damages?     

Company Amalgamation and Schemes of Arrangements

Administration and Re-organisation  

Recent Proposals for Reform

 

Section 7: Finalising a Désastre or Winding Up

 

 

Criminal Offences    

Reporting Possible Criminal Offences

Distribution of Assets   

Payment of Final Dividend by, and Discharge of, the Viscount 

Pooling of Assets and Liabilities  

Discharge of a Personal Bankrupt  

Student Loans and Discharge  

Cessation of Activity by the Viscount    

Exclusion of the Viscount etc from Liability in Damages  

Termination of a Creditors’ or Court Winding Up  

Dissolution of a Company and the Disposal of Records

 

Section 8: Traditional and Statutory Partnerships

Traditional and Statutory Partnerships

 

Section 9: Miscellaneous Enactments

Miscellaneous Enactments  

 

Chapter 6 – Cross Border Insolvency

 

Introduction

Recognition and Universality  

Collecting Evidence in Jersey   

Statutory Requests for Assistance 

Requests by Foreign Courts to the Royal Court  

Application of the General Rules of Private International Law    

Requests by the Royal Court to Foreign Courts    

Comity and Co-operation    

International Co-operation  

  

Chapter 7 – Human Rights

 

The Human Rights (Jersey) Law 2000 (“HRJL”) - Its impact upon the Désastre Law and the Companies Law (on winding up)

Rôle of the Royal Court    

Principally applicable to Public Authorities   

Viscount as a Public Authority    

Liquidator as a Public Authority

Recurring, Absolute and Qualified Rights  

Prescription (Limitation of Action)   

Complainants

New Legislation to be Convention Compliant

Example of Operation of the Right to a Fair Hearing under Article 6 of the Convention

Example of Operation of the Right to Respect for Private and Family Life, Home and Correspondence under Article 8 of the Convention

Example of Operation of the Right to Peaceful Enjoyment of Possessions and Protection of Property under Article 1 of Protocol 1

Interface with the UNCITRAL Model Cross-Border Insolvency Law  

The Effect on the Decision-making Process    

  

Chapter 8 – Scrutiny of Jersey as an International Finance Centre

 

The Edwards’ Report  

International Monetary Fund and MONEYVAL Assessments

The Foot Review: Review of British Offshore Financial Centres

The Bankruptcy Regime

 

 PART 2 – COMMENTARIES ON THE TEXT

 

Commentary 1: Guarantees – Cautions (and Insolvency) 

Definition

Types of Guarantee Commonly Encountered in Practice

Validity of the Guarantee  

The rights of those involved

To what may a Guarantee relate?

Extinction of Guarantees  

Guarantees and Insolvency

 

Commentary 2:  Enforcement in Jersey of Foreign Judgments

 

General Rule and Exceptions

Enforcement Requirements  

Currency Regulations and Restrictions

Documentary Requirements  

International Conventions  

Authentication of Documents

Translation of Documents

Re-opening or Review of Judgments

Pending Proceedings  

Defences  

Jurisdiction

Contractual Waiver

Service of Documents

Interim Relief  

Interest

Time of Enforcement and Subsequent Action

Expenses, Legal Fees and Security for Costs  

Cross-Examination of a Deponent on the Deponent’s Affidavit

Requirements of Affidavit  

New Action Instead of Enforcement

Prescription for Registration

  

Commentary 3: Special Situations: Foreign Taxation and Trusts and Estate Planning

Introduction

Tax        

Trusts and Estate Planning

Conclusion  

 

Commentary 4: Company Winding Up

 

 

Part I –Summary Winding Up Pursuant to Article 146 of the Companies

            (Jersey) Law 1991

Part II – Creditors’ Winding Up Pursuant to Article 157 of the Companies

            (Jersey) Law 1991

 

 Commentary 5: Employment Law and Insolvency

 

Background  

 The Jersey Employment Tribunal  

Redundancy and insolvency  

Effect of winding up under Article 155 of the Companies Law on contracts of employment

Continuation of employment by agreement

Impact of a Royal Court stay on Tribunal claims  

Employment and priority claims

 

Commentary 6: Applications under Article 49 of the Désastre Law – A Practitioners’ Guide

 

Introduction  

Prescribed country or territory

Applications to be notified to the Viscount’s Department

Applications usually “ex parte”

Format of the application  

Registration of the office holder by the Royal Court  

Disclosure of assets/documents  

Examination of witnesses  

Gagging orders  

Freezing orders  

Application of information obtained

Deceased estates  

Time delay  

Costs’ Orders

Private International Law

The correct approach?  

Requests by the Royal Court to Foreign Courts

Format of the application  

Conclusion  

 

Commentary 7: Universality – A Broader Discussion

 

 

The Principle

The Cases

Conclusion

 

Commentary 8: Limited Liability Partnerships in Jersey

 

 

Introduction

Main Characteristics and Differences between Traditional Partnerships

Creditor Protection  

The Type of Partnership Available  

Dissolution  

Winding Up

Conclusion  

 

Commentary 9: Jersey Foundations

 

 

What is a Jersey foundation and what can it do?  

Features of Jersey foundations  

Incorporation of a foundation  

The Charter  

The Regulations

The Founder  

The Council  

The Guardian

Beneficiaries and Provision of Information  

Administrative Matters and Record Keeping

Merger and Migration  

Winding Up and Dissolution

Foundations and the Désastre Law

 

Commentary 10: Saisies Judiciaires

 

 

Introduction  

The statistics

Saisie Judiciaire procedure

Conclusion  

 

Commentary 11: Overview of the Security Interests (Jersey) Law 2012

 

 

Introduction

Scope  

Attachment and perfection

Priorities  

Persons taking free of security interest

Assignments of receivables  

Enforcement of security interests

Registration  

Effect of grantor’s bankruptcy

Commencement, repeal and transitional provisions

 

 PART 3 – MISCELLANEOUS

 

Index   

Useful addresses and other publications

Authors and Editors