The two key pieces of legislation governing insolvency in Jersey are the Companies (Jersey) Law 1991 and the Bankruptcy (Désastre) (Jersey) Law 1990 (BDJL). The former is principally based on UK’s Companies Act 1985, the latter on Jersey’s ancient customary law.
A Jersey company is deemed insolvent if it is unable to pay its debts as they fall due: the ‘cash flow’ test. Unlike other jurisdictions, it is not necessary that the company’s liabilities exceed its assets. Jersey does not have a statutory rescue procedure such as administration, although a court-supervised ‘pre-pack’ sale of a company’s business is a potential option.
There are three procedures that may be used to wind up an insolvent company.
(1) A creditors’ winding up (CWU)
A CWU results in the appointment of an insolvency practitioner (IP) to administer the winding up for the benefit of the creditors. The CWU regime was expanded to include creditors
