A winding up on 'just and equitable' grounds is a fast evolving remedy which allows a company to avoid a désastre. As in England and certain other jurisdictions, it is a flexible tool, with certain generally accepted grounds for the court exercising its discretion to grant the remedy, such as the need for an investigation into the affairs of the company concerned. Unlike désastre, it is not dependent on the cash flow insolvency of the company concerned and the Royal Court has a broad discretion to tailor the powers it may grant a liquidator to the needs of the situation. In particular, a liquidator may be allowed powers to trade a business through the winding up process (an unusual state of affairs), usually with a view to a possible sale of all or part of the business. Whilst the Viscount does have limited powers to trade a company in désastre, these are rarely used in practice.
A winding up on 'just and equitable' grounds can only be ordered by the Court pursuant to Article 155 of the Companies (Jersey) Law 1991. An application can be made by the company itself or by a director or member. Further, the Minister for Economic Development and the Jersey Financial Services Commission both have standing to apply.
The just and equitable winding up of various companies within the Belgravia Financial Services Group, which comprised a group of companies involved in the administration and management of certain investment funds, provides the most important recent example of the remedy's use. Whilst the companies' solvency position at the time of the applications in September 2008 was unclear, there were grounds for concluding that allowing the companies to continue to operate to ensure that the group would carry on managing and administering the investment funds until a new manager could be found, was generally better for the investors in the underlying funds managed by the Belgravia Group and for creditors of the group companies than pulling down the shutters and selling the assets. The problem was that certain key members of the Belgravia Group no longer wanted to remain involved with the companies and their ability to continue to manage the funds was jeopardised. So the Court placed some of the companies into the hands of professional liquidators and granted them a number of powers [link to 2008 JRC 161]. Another high profile example is the winding up of Poundworld in March 2009. The procedure was considered by the company to be a better alternative to a creditors' winding up, as it gave the liquidators the opportunity to sell the stock, in an orderly fashion, over an extended period for the best price, rather than having a fire sale forced on the company by the unpaid shipper or landlord [link to 2009JRC 042].