Vol 20 (2023) - Issue 3

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Guernsey Modernises its Insolvency Law: the Development of the New Guernsey Insolvency Rules

Synopsis
The Guernsey insolvency law will now be updated further to the Companies (Guernsey) Law, 2008 (Insolvency) (Amendment) Ordinance 2020 (the 'Ordinance') which was passed on 15 January 2020 and came into effect on 1 January 2023 for all new liquidations and administrations. Alongside the Ordinance, the Insolvency Rules Committee have developed the Insolvency Rules (the 'Rules') to aid with the enactment of the changes which are to be implemented by the Ordinance. These changes to the insolvency law are set to bring Guernsey in line with other Commonwealth jurisdictions. The Rules and Ordinance have been prepared with the following issues in mind:
1. a lack of independence for liquidators of insolvent companies;
2. during an insolvent liquidation there was minimal requirement to consult with creditors;
3. there was no positive obligation on liquidators and administrators to report director misconduct to the Guernsey Company Registry and/or the Guernsey Financial Services Commission where appropriate;
4. there were no statutory claw-back procedures available to office-holders;
5. there were insufficient powers for liquidators and administrators to obtain information from directors and officers; and
6. there was no proof of debt procedure.


This article will explore the new measures which the Ordinance and Rules have implemented, namely:
1. declarations of solvency in members voluntary liquidations;
2. disclaiming onerous property;
3. reporting delinquent officers;
4. meetings of creditors and shareholders;
5. liquidators' powers of investigation of company affairs;
6. transaction avoidance claims and extortionate credit transactions;
7. wider powers in administrations;
8. powers to wind up foreign companies; and
9. maintenance of essential services and utilities.