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05 June 2020
Jersey imposed travel restrictions in response to the COVID-19 crisis in March 2020 and has been operating a full lockdown for all residents, apart from essential workers, since 30 March 2020.
Most employees in the Jersey financial services industry are now working from home and there has been no interruption to business continuity for the sector.
The government, the courts and the Jersey Financial Services Commission (JFSC), including the Companies Registry and the Security Interests Registry, are all operating using a mixture of remote working and essential worker presence. The JFSC has confirmed that while its physical premises are closed, a flexible business continuity strategy is being implemented. It also intends to take a pragmatic approach when dealing with filings and submissions and responding to clients (with most filings and submissions being done online).
This article sets out potential insolvency reforms which may be implemented in the Jersey financial services sector.
The government's aim for business is to:
As such, the priorities are to maintain cash flow so that people can remain in employment and businesses do not have to close permanently and can restart trading as soon as social distancing and other containment measures ease.
With this in mind, the government has announced various initiatives to support local business, including:
The JFSC is responsible for regulating and supervising Jersey's financial services industry, including Jersey entities which conduct regulated activities and non-Jersey entities which conduct regulated activities in or from Jersey. Jersey has no special insolvency regime for regulated entities and it is unlikely that the JFSC will relax any financial resource or capital adequacy requirements at this time.
However, the JFSC has announced that it is mindful of the disruption and challenges that regulated businesses are currently facing and has therefore extended various regulatory deadlines, including those relating to the submission of audited and unaudited financial statements and other regulatory filings. The JFSC has also reminded regulated businesses of the importance of complying with their notification obligations under the JFSC Codes of Practice.
The UK government recently announced proposals to temporarily suspend wrongful trading provisions for directors with retrospective effect from 1 March 2020 and to accelerate proposed amendments to its insolvency laws (first announced in 2018) to include new restructuring tools and provide greater protection to companies in financial difficulty.
Jersey is a creditor-friendly jurisdiction and does not impose a moratorium on enforcement of security following the commencement of insolvency proceedings. Any insolvency measures introduced must not disturb any international financing transactions structured using Jersey entities or affect secured creditors' rights.
Although it is too early to say what insolvency measures Jersey may adopt in response to the COVID-19 crisis, it is worth noting the following:
Jersey will no doubt continue to monitor international developments with regard to insolvency reform while protecting its status as a leading international finance centre, a creditor-friendly jurisdiction and a good place to do business.
For further information on this topic please contact Damian Evans or Bruce MacNeil by telephone (+44 1534 514 000) or email (firstname.lastname@example.org or email@example.com). The Ogier website can be accessed at www.ogier.com.
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