This interview features Alan Roberts, Grant Thornton director, and he shares his views on the future of the Jersey insolvency industry.
What are the options available to companies in Jersey for insolvency?
Jersey currently offers only liquidation as an option for companies that wish to enter into a formal bankruptcy process. This is in contrast to Guernsey where there are administration options and a different liquidation process. Jersey law is very different from English law. Anyone looking for an insolvency or restructuring solution on Jersey should consult a Jersey resident insolvency practitioner, or an experienced advocate on Jersey.
Modern restructuring options such as administration and a Company Voluntary arrangement are not available at the moment. A new law amendment in 2022 created a modern creditors’ winding-up process. Creditors can issue a demand to creditors and, if that is not answered or the company is clearly insolvent, they can petition the Court for winding up orders. Although the Jersey Companies Law provides for compromises and arrangements that include a cram-down element, these are rarely used in insolvency restructuring except in large cases.
Jersey’s Companies Law does not recognize the concept of receivership. The Royal Court appointed an asset receiver recently. There are also law reform discussions that could see receivership being introduced into the Security Interests (Jersey), Law 2012, to allow appointment in the event a secured debt defaults.
A Jersey-registered business can have its COMI elsewhere and its affairs transferred to another jurisdiction. This is quite common. This is best illustrated by the UK administration process, where letters of demand are often issued by the Royal Court of Jersey to, for instance, the English Court to allow a Jersey company be placed in administration in England. At the end of English administration, the disconnect between the two laws is apparent. There is no provision in English law for a Jersey company being placed into English creditors’ winding-up. The next step could be a Jersey liquidation!
Jersey law is very different from English law. Anyone looking for a solution to insolvency or restructuring in Jersey should speak with a Jersey resident insolvency practitioner, or an experienced advocate.
What are the top insolvency concerns facing Jersey businesses?
Jersey-based businesses face common concerns due to rising interest rates and increased costs of supply chain. A small island economy can experience additional stresses. This is manifested in the lack of labour in some sectors due to limitations on housing and work permits, the logistics chain costs for imports to small islands, and the cost for air and sea freight, as well as passenger travel, which have a knock-on effect upon the demand for hotel accommodation.
The agricultural sector faces constant challenges in scaling up production. This has been reduced in recent years due to cheaper imports. However, none of these areas have resulted in significant insolvency or restructuring work.
Jersey’s finance industry is a key driver of the economy. Government and stakeholders are defending its success in global wealth management.
What resilience has the business shown in the face of the COVID-19 epidemic?
It has been difficult to evaluate the effect of COVID-19 on formal insolvency or restructuring. This practitioner is able to report that there has not been an increase in the number of formal liquidations or restructuring. There are changes in activity in some areas of the economy, and businesses can close their doors discreetly without formal winding down.
Importantly, the equitable and just process of winding up a Jersey company has allowed for wide-ranging restructuring options, even though they are in liquidation. This process is within the jurisdiction of the Royal Court. This is not an insolvency process. The court can tailor a winding-up order to suit the restructuring. In the past, this allowed the quasi-prepack process to enable the administration of a Jersey group and allow for the survival of a business that would otherwise have been closed.
Are there any trends in insolvency? Do you have any predictions about how the future will look in 2023?
Future insolvency and restructuring work may be possible in Jersey if a modern legal process is introduced that follows the principles of administration. Voluntary arrangements or receivership could be positive steps to align Jersey with modern common law jurisdictions. A strengthened reporting regime, administered by liquidators, may allow for a proactive approach to sanctioning directors who are not in compliance.
Alan Roberts, Director
2nd Floor, Kensington Chambers 46/50 Kensington Pl St Helier J1 1ET Jersey
Tel: +44 01534 885742
Alan Roberts works as a director for Grant Thornton Limited. He is a Chartered Accountant and UK-licensed Insolvency Practitioner. He also has the certification of Fraud Examiner. Over 30 years, he has been a specialist in insolvency, restructuring and work in many jurisdictions including the UK, US and Caribbean. He is one of four Jersey-approved liquidators.
Grant Thornton Limited (Channel Islands).is an affiliate firm of Grant Thornton, with offices in Guernsey & Jersey. These offices have been in existence for over 35 years and provide top-quality services to a broad range of private and corporate clients who operate in many different sectors locally as well as internationally.