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Putting Jersey Companies into English Administration

February 2010 - Corporate & Commercial. Legal Developments by Bedell Cristin.

A Jersey company or one of its creditors may wish the company to be placed into administration in England under Schedule B1 of the UK's Insolvency Act 1986 (the "Act").

The ability to continue the business of an insolvent company as a going concern may be in the best interests of the creditors of the company, particularly where the assets of the company comprise commercial property in England. In both structured finance and bank financed transactions where UK real estate is being held through offshore borrower vehicles for tax and other reasons, there may be solid income streams even if loan to value ratios have declined below the level permitted in the transaction documents. Creditors may not wish for the property to be the subject of a forced sale into a depressed market and the structure liquidated. While in Jersey both a désastre and a just and equitable winding up may permit the business of the company to be continued for a time, there is no equivalent to an English administration order whereby an insolvency practitioner is appointed with the objective of (for example) rescuing a company and the whole or any part of its undertaking as a going concern, or achieving a more advantageous realisation for creditors than would be effected on a winding up.

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Putting Jersey Companies into English Administration