Reform of Guernsey’s Corporate Insolvency Laws… continued
Article first published by Appleby in March 2017
In February 2016 we reported on proposed changes to Guernsey’s Corporate Insolvency Laws.
By way of update, the Committee for Economic Development has now submitted a policy letter to be considered by the States of Deliberation with respect to proposed amendments to Guernsey’s Companies’ Law to facilitate changes to the corporate insolvency regime.
The aim of the proposed changes is to modernise the Island’s corporate insolvency law and make clear the possible outcomes in a liquidation or administration procedure. This in turn will make the financial services industry in Guernsey more competitive thereby facilitating the flow of investment into the economy. Key changes include:
- Administrators will be empowered to make distributions to creditors where these are in accordance with the objectives of the administration;
- To introduce objectives of a winding up, including the duties of office holders and how those should be fulfilled;
- There will be a requirement for liquidators to be independent in an insolvent voluntary winding up;
- To provide for rules for the establishment of claims in a winding up;
- To allow a liquidator to disclaim onerous assets and unprofitable contracts in certain circumstances;
- To authorise the establishment of a statutory scheme for unclaimed dividends;
- To require administrators and liquidators to report findings or suspicions of misconduct on the part of directors or officers of a company; and
- To introduce a statutory power for the Royal Court to wind up insolvent foreign companies.
- The States will now consider the policy letter and decide whether to direct the preparation of such legislation as may be necessary to give effect to the proposed changes. This is a significant and welcome step in the development of Guernsey’s insolvency offering.