Insolvency work rewards acting early and punishes waiting. By the time a company is plainly insolvent, most of the useful options have gone, and what is left is the argument about who bears the loss.
We act for creditors trying to recover what they are owed, for directors worried about their own position, and for individuals facing personal insolvency. Those are different problems and they need different advice, so this page deals with each in turn.
Secure an Insolvency Assessment
If You Are Owed Money
The first question is not which procedure to use. It is whether there is anything left to recover.
We can establish what assets exist, whether they are still in the company, and whether anything has left it that should not have. That assessment decides everything else, because a well-run insolvency process against an empty company is an expensive way of confirming what you already suspected.
Where there is something to pursue, the routes available in Jersey include:
- Désastre under the Bankruptcy (Désastre) (Jersey) Law 1990, a creditor-led process placing the debtor’s property in the hands of the Viscount.
- Creditors’ winding up under the Companies (Jersey) Law 1991, where the company itself resolves to wind up and a liquidator is appointed.
- Just and equitable winding up, available through the Royal Court where the circumstances justify it.
- Ordinary debt proceedings, which frequently remain the better route where the debtor is solvent but unwilling.
Where there is a real risk that assets will be moved before any of this can take effect, the Royal Court can grant interim relief, including freezing orders and the customary law remedy of arrêt entre mains served on a party holding the debtor’s assets.
If You Are a Director
Directors usually come to us later than they should, and almost always because they are worried about personal exposure rather than about the company.
Where a company has no reasonable prospect of avoiding insolvency, continuing to trade can expose a director personally. Under the Companies (Jersey) Law 1991 the Royal Court can order a director who knew, or was reckless as to, that position to contribute personally to the company’s assets. Similar exposure arises from transactions at an undervalue and from preferences given to particular creditors.
None of that is automatic. Each turns on what the director actually knew and when, and on what steps were taken once the position became apparent. That is an evidence question, and the contemporaneous record, board minutes, management accounts, the advice taken, is usually decisive.
The practical point: taking advice early is what creates the record that protects you. Taking it after the company has failed means arguing about a record that was never made.
If You Are Facing Personal Insolvency
Personal insolvency in Jersey runs through désastre or through a remise de biens, a customary law process allowing an individual with realisable property to have it administered by the Court for the benefit of creditors.
Which is appropriate, and whether either is appropriate at all, depends on what you own, what you owe and to whom. In some cases an arrangement with creditors is achievable and preferable to a formal process. We will tell you honestly which position you are in.
Where Claims Arise After the Event
A liquidator, the Viscount or a creditor can pursue claims that arise out of the failure itself: wrongful or fraudulent trading, transactions at an undervalue, preferences, and misfeasance by directors.
These claims are worth pursuing where there is a defendant worth pursuing, whether that is a director personally, an insurer, or a third party who received company assets. Establishing that early avoids spending money on a claim with nothing behind it.
Why Clients Instruct Sinels
We operate completely free of institutional conflicts of interest. We hold no standing retainers with the banks, insolvency practitioners or trust companies who frequently sit on the other side of these matters, so we can act against them.
We are a litigation practice. Insolvency disputes turn on evidence and on timing, and we will tell you at the outset when the likely recovery does not justify the cost of pursuing it.
Speak to Our Insolvency Team
Or Call Us: +44 (0)1534 620500
Frequently Asked Questions About Corporate Insolvency & Bankruptcy
What is a désastre?
A désastre is a court-driven insolvency process under the Bankruptcy (Désastre) (Jersey) Law 1990. On a declaration being made, the debtor’s property vests in the Viscount, who realises it and distributes the proceeds among creditors.
It can be applied for by a creditor as well as by the debtor, which makes it a genuine enforcement option rather than simply a last resort for the debtor.
Can a director be made personally liable for a company’s debts?
Not as a general rule, but there are exceptions and they matter. Where a director knew, or was reckless as to the fact, that there was no reasonable prospect of avoiding insolvency and continued to trade, the Royal Court can order a personal contribution to the company’s assets.
Exposure can also arise from transactions at an undervalue, from preferences, and from misfeasance. What protects a director is a documented record of what was known and what was done about it.
We are owed money by a company we think is failing. What should we do first?
Establish whether there are assets before choosing a procedure. Then act quickly, because the position deteriorates and because other creditors are making the same assessment.
If you suspect assets are being moved, say so at the outset. Interim relief is available from the Royal Court but only while there is still something to freeze.
How long do we have?
Jersey’s ordinary prescription period is three years, which is shorter than the position in England and Wales. Claims arising from the insolvency itself have their own timing considerations.
The practical deadline is almost always shorter than the legal one, because recovery depends on assets still being there.
