The States today approved the Companies (Guernsey) Law, 2008 (Insolvency) (Amendment) Ordinance, 2020 (“the Ordinance”). It is anticipated that the Ordinance will come in to force shortly, following Regulations by the Committee for Economic Development (the “Committee”).
Background to the insolvency law reform:
Guernsey’s insolvency regime has remained largely unchanged for many years. Whilst it is workable in its current form and, thanks to a flexible and pragmatic Court, is used successfully on many cases; the law suffers deficiencies in certain areas, leading to uncertainty and unpredictability.
Deficiencies in the current corporate insolvency regime include:
- Lack of independence required for Liquidators of insolvent companies
- Minimal requirement to consult with creditors in insolvent Liquidations
- No positive obligation on Liquidators and Administrators to report director misconduct to the Registrar and the Regulator
- Insufficient powers for Liquidators or Administrators to obtain information from directors and officers and pursue recovery action for stakeholders
- No proof of debt procedure