Liability For Wrongful Trading In Jersey

Increasing cash flow pressure on businesses caused by the economic impact of the coronavirus (COVID-19) situation has resulted in a heightened risk for Jersey directors that a company may be wrongfully trading and that personal liability may therefore accrue to them. This briefing explains how Jersey directors can protect themselves in the event that a company is approaching insolvency.

In Jersey, both the Bankruptcy (Désastre) Jersey Law 1990 (Article 44) and the Companies (Jersey) Law 1991 (Article 177) (the "Laws") make provision for personal liability in respect of wrongful trading. A company must be in a creditors' winding up or have had its property declared en désastre for these provisions to apply, however, it is essential that directors keep a constant eye on this prior to the commencement of any such process.