Guernsey reforms Corporate Insolvency Laws
A review of Guernsey’s personal and corporate insolvency laws has been compiled by the Commerce and Employment Department with significant input from key stakeholders. The Department’s proposals have now been published, outlining the areas that will be reformed and which projects will not be taken forward.
Regarding the reform of Guernsey’s corporate insolvency laws, the Department has decided not to introduce a single insolvency law, instead opting to amend the Companies (Guernsey) Law, 2008 with the following key changes:
- The introduction of Insolvency Rules
- A requirement that liquidators be independent in an insolvent voluntary winding up
- Setting out the general objectives of liquidation
- Allowing for greater information gathering powers by insolvency office holders including the ability to examine current and former directors
- Introducing a provision to claw back undervalued transactions and disclaiming onerous assets
- The introduction of a statutory duty on administrators and liquidators to report to the relevant authorities any misconduct on the part of a company’s directors and officers
- The introduction of a process to establish and rank claims in a liquidation
- The express power for administrators to make distributions to all creditors where these are in accordance with the objects of the administration.
The Department will not be pursuing the following projects:
- Permitting out of court administration appointments
- Providing for a procedure by which the Court may set aside a statutory demand
- The appointment of a receiver as a pre-insolvency measure to protect assets
- Reforming Guernsey’s Désastre and Saisie laws
- Introducing a Company Voluntary Arrangement process
- Avoidance of charges placed within a certain time period.
The publication of the Department’s proposals represents the culmination of many years’ hard work and co-operation. The proposed changes will enhance Guernsey’s corporate insolvency regime whilst maintaining the flexibility to respond to new challenges as they arise.
The Department will now submit policy letters to the States for consideration as a pre-cursor to drafting amending legislation.
Further information relating to the above can be found here.