The facts:

An application had been made by Bank of Scotland Plc and the Governor and Company of the Bank of Ireland (the Applicants) for a letter of request to be sent by the Royal Court of Jersey to the High Court of England and Wales in respect of four Jersey companies which were ultimate beneficial owners of English real estate.  

The Applicants were substantial creditors of REO (Powerstation) Limited. The Bank of Scotland Plc was a significant creditor of the other three companies, REO (Site Assembly) Limited, REO (88 Kirtling St) Limited and REO (8 Brooks Court) Limited (together with REO (Powerstation) Limited, the Companies).  

A letter of request seeking administration orders under the Insolvency Act 1986 (the Insolvency Act) was requested in relation to the Companies on the basis that the main assets of the Companies were, directly or indirectly, real estate in London. While it would be possible to have the Companies declared en désastre in Jersey, the Court held that there would be considerable advantage in appointing London based administrators operating within an administration order granted by the High Court.  

The question arose whether the Royal Court of Jersey had jurisdiction to make such a request.  

The Judgment:

The Court had previously made numerous applications to British courts pursuant to the provisions of Section 122 of the Bankruptcy Act 1914, as well as having received requests from other courts for assistance pursuant to Article 49 of the Bankruptcy (Désastre) (Jersey) Law 1990 (the Désastre Law). The Deputy Bailiff assumed (such assumption being confirmed by Re A Debtor, Ex Parte Viscount of the Royal Court of Jersey [1981]), if the Royal Court could give assistance to the courts of Australia, Finland, Guernsey, The Isle of Man and the United Kingdom (as prescribed in the Désastre Law), then unless there was good reason to the contrary, those countries or territories could give assistance to our court.  

The difference here however, was that no form of désastre was present, and indeed it was because it was argued that it would not be in the best interests of the Companies or the creditors for a désastre to be declared that an administration order was sought. The United Kingdom is however a prescribed country for the purposes of giving assistance to courts outside the Island and the Deputy Bailiff considered that although this may not have been a désastre case which was being considered, there was certainly reason why one may have anticipated that a request such as this would receive sympathetic consideration.  

The considerations of the Court went to support two propositions:

  1. The Court does lend its assistance in appropriate cases to a process by which formal proceedings against a debtor can be suspended in order to achieve an orderly realisation of the debtor's assets; 
  2. In insolvency matters generally, the Court has in the past exercised an inherent jurisdiction in a number of different respects.  

It seemed clear from previous case law therefore, that the Court should contemplate issuing a letter of request if it was in the interests of the creditors, the debtor or in the public interests to do so. The reputation of the Island was also considered within these terms.

Regard was given to paragraph 3 of Schedule B1 of the Insolvency Act which sets out a "hierarchy of objectives" whereby it states that "the administrator of a company must perform his functions with the objective of:

  1. rescuing the Company as a going concern;
  2. achieving a better result for the Company's creditors as a whole than would be likely if the company were wound up (without first being in administration); or
  3. realising property in order to make a distribution to one or more secured or preferential creditors".

Although it was agreed that the first two of these objectives were also objectives of the Remises de Biens (under the Loi (1839) sur les Remises de Biens, which establishes a process by which a debtor can surrender his assets into the control of the court whereby he hopes to achieve a more orderly administration of his estate for the benefit of ordinary creditors), the Court was satisfied that it was entirely proper for the Royal Court to issue a letter of request to the High Court of England and Wales seeking administration orders under the Insolvency Act in relation to the Companies.  

It was agreed that such an application was consistent with the approach the Royal Court would have taken on a comparable process were it to take place in Jersey. The letter of request was therefore issued.  

Comment:

A helpful case setting out the circumstances in which the Royal Court will be prepared to issue letters of request to the High Court in England for assistance under the Insolvency Act. About Ogier Ogier Legal is a world leader in the provision of Jersey, Guernsey, BVI, Cayman and Luxembourg law advice. With over 190 lawyers across 11 jurisdictions, Ogier covers all time zones and key financial markets.