In decisions delivered on August 24 2015 and October 7 2015 the Royal Courts of Guernsey and Jersey, respectively, held that where the affairs of two insolvent companies (incorporated in Jersey and Guernsey, respectively) are so intermingled that the expense of unravelling them would adversely affect distributions to creditors, the companies may be treated as a single entity.

Having concluded that Guernsey's legislative framework did not prevent such an application, and with the creditors' interests firmly in mind, the deputy bailiff of Guernsey granted a proposal by the joint liquidators (from Grant Thornton) to consolidate the assets and liabilities of the Guernsey company with the assets and liabilities of a related but separate company incorporated in Jersey, subject to the Jersey court's approval. The Jersey court subsequently reached a similar conclusion in terms of its jurisdiction to grant a pooling order.

This is the first time that the Guernsey court has considered and granted an order allowing a procedure which, on its face, contradicts basic principles (ie, separate legal personality and that creditors can share only in the assets of the company against which they are entitled to lodge a claim). While the Jersey court has granted a similar application previously in the context of two Jersey companies, it was the first time that an application had considered the pooling of assets and liabilities of a Jersey company with those of a foreign company. Further, it was the first time that such an order has been made in the context of a just and equitable winding-up.


The Huelin-Renouf Group was a leading cross-channel cargo shipper and haulier which carried approximately 21% of all cargo between the United Kingdom and the Channel Islands. It was a lifeline for the Channel Islands for almost 80 years. When it encountered financial difficulties in 2013, the group employed 92 staff across its companies in Jersey, Guernsey and a sister company called Eagleway Freight Limited in the United Kingdom.

On August 20 2013 the Jersey Royal Court ordered the winding-up of Huelin-Renouf Shipping Limited on just and equitable grounds (the court held that other regimes for an insolvent winding-up were neither available nor beneficial to the creditors). The following day, Huelin-Renouf Shipping (Guernsey) Limited was wound-up pursuant to Part XXIII of the Companies (Guernsey) Law, 2008. Alan Roberts, Jamie Toynton and Ben Rhodes of Grant Thornton were appointed joint liquidators for both companies. Eagleway was placed into administration in England at the same time.(1)

Companies' operations intermingled

The intermingling of the companies' affairs was apparent when the winding-up orders were made, but investigations into the companies' operations conducted by Grant Thornton revealed the extent of this activity. The liquidators concluded that the companies did not operate as distinct entities, as there was little evidence that suppliers, creditors or customers were aware of with which entity they contracted.

The Guernsey company was entirely dependent on the Jersey company for its ongoing funding and would have had insufficient assets to pay a dividend to any of its creditors, including preferential creditors (mostly employees). Grant Thornton thus concluded that if the companies were liquidated as separate entities, there would be significant professional costs incurred in determining the true assets and liabilities of each company, given the complex inter-company position. The likely dividend to Jersey creditors would be materially reduced as a result of those costs. However, consolidating the assets and liabilities of the two companies would allow creditors to receive a dividend from the pooled estates and would obviate the need to incur additional costs. The projected outcome of the pooling was that the preferential creditors from both companies would be paid in full and the unsecured creditors as a whole would receive an increased dividend.

Guernsey decision

The Guernsey court was satisfied that the application could be brought pursuant to Section 426 of the Guernsey Companies Law and that there was no statutory bar against granting such an order. Following Flightlease Holdings (Guernsey) Ltd v Flightlease (Ireland) Ltd,(2) the deputy bailiff considered the approach taken under English insolvency law, as well as that taken under Jersey law, in relation to customary law procedures (eg, désastre).(3) The court considered the Jersey Royal Court's decision in Re Corebits Services Limited (in liquidation)(4) and Zoombits Limited (in liquidation), which approved the pooling of assets and liabilities of two Jersey companies, and found that a similar approach could be taken in respect of two Guernsey companies.

The Guernsey court placed due regard on the fact that the Guernsey company was reliant on the Jersey company for its ongoing funding, with the consequence that once the Jersey company entered liquidation, the Guernsey company could not survive. Other key considerations in reaching its decision were that:

  • the majority of assets were held by the Jersey company;
  • both companies had been managed by a single management team based in Jersey;
  • there was no resident Guernsey director;
  • invoices were issued in the name of the Jersey company; and
  • when it came to branding, both companies portrayed themselves as if a single Channel Islands entity.

Echoing the conclusions of the vice-chancellor in the English Court of Appeal's judgment in Re Bank of Credit and Commerce International SA (No 3)(5) the deputy bailiff held as follows:

"When one remembers that the purpose of a liquidation such as the present one is to realise a company's assets for the benefit of creditors, it is plain that the proposed pooling arrangement is the only way in which the creditors of the Guernsey company are likely to receive anything... Accordingly, if there is a way in which those creditors receive more than they otherwise would, common sense dictates that such a solution should find favour with the Court… Moreover, because of the extremely close connection between the Jersey and Guernsey companies, if there is a solution that enables them to be paid something, the injustice of declining to sanction the Joint Liquidators' proposal becomes self-evident."(6)

The Guernsey court held that given the potential benefit in the Jersey liquidation, it would be appropriate to facilitate the transfer; however, it noted that if the Jersey court disagreed, there would be no prejudice to the Guernsey creditors, because the cost of making the application would not affect a distribution that was already estimated to be zero.

Jersey decision

The Jersey court also considered the extent of its jurisdiction in the context of a just and equitable winding-up and held that the broad discretion under Article 155 of the Companies (Jersey) Law 1991 provided the power to grant the order sought. It also referred to its earlier decision in Re Corebits and Zoombits and examples of désastre in the context of the Jersey law where, in creditors' interest, compromises involving the consolidation of assets with other entities had been permitted. The court noted the liquidators' evidence that the companies' affairs were inextricably intermingled and accepted that the estimated dividend positions (in a pooled or non-pooled scenario) were reasonable. The court accordingly concluded that the transfer and consolidation of the assets and liabilities of the Guernsey company with those of the Jersey company would benefit all of the creditors from both companies. The court also accepted the liquidators' undertaking that the creditors from both companies would be treated in accordance with the laws of their respective jurisdiction, albeit noting that, pursuant to the winding-up order in respect of the Jersey company, the statutory provisions concerning the rights of creditors (notably preferred creditors) had been expressly incorporated.


These decisions represent a welcome development in cross-bailiwick cooperation and insolvency and restructuring law. In extending the Flightlease guidelines (which were held to be of general application to companies operating outside the financial services sector), the Guernsey court confirmed that gaps in the statutory regime could be filled by looking to English law and that guidance on customary law procedure could be sought from Jersey. However, it is clear that Guernsey's statutory regime – which is intentionally less prescriptive than those of Jersey or England – has once again enabled the court to take a more pragmatic and flexible approach to insolvency situations as they arise.

Likewise, the Jersey court has once again demonstrated that, in appropriate circumstances, it will grant orders in the exercise of the discretion conferred on it by statute, for the benefit of interested parties (in the case of insolvent companies, the creditors). In recent years, the Jersey Royal Court has broadened the circumstances in which it will order the winding-up of Jersey companies on just and equitable grounds, including insolvent companies where a creditor's winding-up or désastre are unavailable. In granting such orders, the Jersey court will typically incorporate provisions of the Jersey Companies Law that would apply in a creditor's winding-up and which clearly provided the legal framework for granting the cross-border pooling in this case.

For further information on this topic please contact Nigel Sanders at Ogier's Jersey office by telephone (+44 1534 504 000) or email ( Alternatively, please contact Mathew Newman at Ogier's Guernsey office by telephone (+44 1481 721 672) or email ( The Ogier website can be accessed at


(1) The administration of Eagleway was concluded before the applications were made.

(2) [2009-10] GLR 38.

(3) Désastre is a customary law of Guernsey and Jersey which provides that when a person or body corporate is unable to pay its debts, it is said to be en etat de désastre – that is, that its current liabilities exceed the value of its assets. Désastre allows all of the creditors to share the proceeds of sale of a debtor's chattels, as opposed to a single creditor liquidating assets entirely for its own benefit.

(4) [2011] JRC 166.

(5) [1993] BCLC 1490.

(6) Paragraph 22 of In the matter of Huelin-Renouf Shipping (Guernsey) Limited (In Liquidation).

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