Creditors’ Winding-up
A creditors’ winding-up under the Companies (Jersey) Law 1991 (the “Companies Law”) is broadly similar to a creditors’ voluntary winding-up in the UK. The creditors' winding-up procedure is used for Jersey companies where a summary winding-up is not possible. It is commenced by the company passing a special resolution. The company must give 14 days' notice to the creditors of the day on which it intends hold the meeting to pass the resolution, calling for a meeting of the creditors to follow such meeting and usually nominating a liquidator.
Notice must be published in the Jersey Gazette and the directors must prepare a statement of affairs of the company. The creditors may appoint a liquidator of their own choice in place of the nominated liquidator. The winding-up commences at the time that the special resolution is passed. The company continues to exist until its dissolution, but must cease to carry on its business, except as may be required for its beneficial winding-up. Any transfer of shares without the sanction of the liquidator or alteration of the company's membership after this time will be void.
Summary Winding-up
A summary winding-up is predominately used when a company is able to discharge its liabilities as they fall due. The process is similar to a UK members’ voluntary winding-up. The summary winding-up procedure under the Companies Law can be used by companies that are solvent. The company must pass a special resolution and the directors are required to make a statement of solvency to commence the winding-up process.
Once the winding-up process has begun, the powers of the company are limited to realising its assets, discharging its liabilities and distributing its assets. The directors will then make an additional solvency statement that the company has no assets and no liabilities. Upon registration of this statement with the Jersey Registry, the company will be dissolved. The company continues to exist until its dissolution.
Désastre
A désastre under the Bankruptcy (Désastre) (Jersey) Law 1990 is the main insolvency procedure used by creditors in Jersey. An application is made to the Court that the company is declared “en désastre”. Such an application, which must state that the company is insolvent and that it has realisable assets, can be made by a creditor (with a claim of £3,000 or more) or by the company itself. On a declaration of désastre, title and possession of the property of the debtor vest with the Viscount.
The Viscount has the power to dispose of the company’s property, continue business, pay debts, and compromise with creditors. Costs incurred by the Viscount are paid out of the company’s assets in priority to all other claims. The Viscount can also choose to set aside certain transactions in the same way as a liquidator.
Once all the company’s property has been realised, the Viscount supplies all creditors and a court official with a report and accounts relating to the désastre. The Viscount pays the creditors whatever final dividend is due. The date the final dividend is paid is the date on which the Viscount notifies the Jersey Registry that the company should be dissolved.
Cross-border Insolvency Procedures
The Companies Law provides that the Royal Court in Jersey shall assist certain countries and territories (currently UK, Guernsey, Isle of Man, Finland and Australia) in all matters relation to insolvency, as it thinks fit. The Royal Court retains its pre-existing customary right to exercise inherent jurisdiction to assist other countries or regard the rules of private international law. The EU Regulation on Insolvency Proceedings does not apply in Jersey.