Introduction
Immoveable property
Application for recognition
Consultation with viscount
Letter of request
Issuing representation
Alternative orders
Timescale
Comment
In the current COVID-19 environment, more businesses will likely become insolvent. Some of those businesses will have an interest in Jersey property – for example, as owners of Jersey property or holders of a lease of retail premises situated on the island. Businesses may also have locally employed employees to consider.
Insolvency practitioners appointed outside Jersey in respect of an overseas person or company (or Jersey company subject to English insolvency proceedings) must be recognised in Jersey before they can deal with certain forms of Jersey property. This is because Jersey immoveable property can be transacted only by passing a contract before the Royal Court.
Immoveable property includes land and buildings (including flying freeholds) and leases for nine years or more (contract leases). The assignment of a contract lease must be passed by the Royal Court; therefore, an insolvency practitioner wishing to assign the benefit of a contract lease will require Jersey recognition.
Practitioners appointed in the United Kingdom, Guernsey, the Isle of Man, Australia or Finland can apply for recognition under Article 49 of the Bankruptcy (Désastre) Jersey Law 1990. This provision allows the Jersey court to assist the courts of a foreign jurisdiction in insolvency matters on the basis of a letter of request.
Practitioners from other jurisdictions must apply under customary law as a matter of comity.
In practice, there is little difference in the approach of the Jersey court to applications under Article 49 and applications under customary law, and the following procedure is followed in both cases.
Stage one is to consult with the Viscount's Department. The viscount is the executive officer of the court and has responsibility for bankruptcy matters. The department produces a useful guide on recognition applications that can be accessed on the Jersey government website.
The viscount will want to know what action the practitioner intends to take within Jersey and the impact of the insolvency on any locally employed staff. Jersey has no equivalent of the UK Transfer of Undertakings (Protection of Employment) Regulations 2006, although mechanisms have emerged to transfer staff to alternative employers, where this is a viable alternative. Jersey also has laws relating to unfair and wrongful dismissal and on redundancy, including collective consultation obligations. The viscount will also be interested in the payment of priority debts, which in Jersey include:
- arrears of wages;
- holiday pay and bonuses;
- income tax;
- goods and services tax;
- social security payments;
- rent owed to landlords; and
- parochial rates.
The viscount will also want to know how any Jersey unsecured creditors will be dealt with.
Having taken initial guidance from the Viscount's Department, the next stage is to present the viscount with a draft application. This will include:
- a draft representation setting out the relief sought;
- a draft affidavit in support; and
- a draft letter of request.
The viscount will provide feedback on the documents and indicate any concerns with the application.
Stage three is to obtain a letter of request from the insolvency practitioner's home court. Once the letter of request has been issued, the finalised Jersey application is sent to the viscount for formal approval. Assuming that the viscount has no further comments, they will write to the court indicating that their advice has been sought and that they are content for the application to proceed. Alternatively, if the viscount has concerns, these will be indicated to the court and the viscount may wish to attend the recognition hearing.
The representation is issued by lodging it with the court no later than Thursday lunchtime for a hearing on the Friday afternoon. If the application is straightforward, it will be dealt with that Friday afternoon and the hearing can be done in conjunction with the sale of property or the assignment of a lease. If the hearing is not straightforward (eg, the viscount has objections to the orders sought), the matter will be adjourned to a later date when all interested parties can attend.
Other reasons why an insolvency practitioner may seek recognition in Jersey are:
- disclosure of assets or documents;
- examination of witnesses; and
- freezing orders.
In addition, some financial institutions will release assets or funds only where the practitioner has been recognised in Jersey.
The timescale for recognition largely depends on how long it takes for the practitioner to obtain a letter of request from the home court.
If the matter is urgent, the Viscount's Department will typically respond to enquiries within a few days; therefore, the Jersey part of the process can be done in three to four weeks or less, assuming that there are no complications.
An understanding of the recognition procedure is important when insolvency practitioners are dealing with Jersey property.
For further information on this topic please contact Jonathan Hughes, Damian Evans or Helen Ruelle at Ogier by telephone (+44 1481 721 672) or email ([email protected], [email protected] or [email protected]). The Ogier website can be accessed at www.ogier.com.
