Court tackles Jersey insolvency jurisdiction
Posted: 25th April 2013
In a case which raised novel issues on the inter-relationship between the courts of England and Jersey, the High Court has refused a request by secured creditors for an English administration order in respect of a Jersey-registered property investment company which has its centre of main interest on the channel island.
Following an unsuccessful property development on the English mainland, the company owed more than £8 million to a bank and had assets worth no more than £150,000. The company’s sole director had agreed that the company’s assets should be sold to enable the bank to recover what meagre sums it could.
Both the bank and the director considered that insolvency procedures available in Jersey would be inappropriate to deal with the matter and that it would be highly desirable that an English administration order be made. Armed with a written ‘request for assistance’ from the Royal Court of Jersey, the bank applied to the High Court for such an order under section 426(4) of the Insolvency Act 1986.
Dismissing the application, the court noted that the case involved a ‘significant point of principle’ but ruled that jurisdictional issues ‘could not be ducked’. Noting that no insolvency proceedings were on foot in Jersey, and that the parties had no apparent intention to commence any, the court ruled no ‘assistance’ could be given to the Jersey court and that the ‘jurisdictional threshold’ had not been crossed.
In circumstances where all relevant parties were in favour of an English administration, the court observed that it would have been minded to grant the application had it not been for the jurisdictional objection.
Mr Justice Mann concluded: “I consider that on the wording of the section, and against the insolvency context in which I consider that the section was intended to operate, this court cannot ‘assist’ another court which is not actually doing anything, or apparently intending to do anything, in its insolvency jurisdiction… Without some form of existing or future intended activity by the foreign insolvency court, I do not see how that court is ‘assisted’”.