Vol 20 (2023) - Issue 3

Article preview

A New Dawn for Guernsey’s Insolvency Law

Synopsis
With the threat of recession impacting businesses across all areas of economic activity in 2023, anyone involved in structures utilising Guernsey companies should be aware of significant reforms to the Island's insolvency regime that came into operation as of 1 January 2023.
Whilst Guernsey's previous insolvency regime was effective, its reform has been long awaited to ensure that Guernsey has one of the most sophisticated insolvency regimes globally. Proposals for reform were given approval in 2017 and were provided for in the Companies (Guernsey) Law, 2008 (Insolvency) (Amendment) Ordinance, 2020 (the 'Ordinance') which also provided for a fluid set of rules now contained within the Companies (Guernsey) (Insolvency Rules) Regulations, 2022 (the 'Rules') to assist in the implementation and interpretation of the provisions facilitating welcome changes to the Companies (Guernsey) Law 2007, as amended (the 'Companies Law'). Guernsey Insolvency Practice Statements have also been developed by ARIES (the Channel Islands member of Insol International) for use by insolvency professionals to compliment the new legislation and whilst they are a voluntary industry initiative they assist in setting out best practice principles and compliance standards which professionals are encouraged to comply with.
This article will summarise some of the new key provisions which; (i) give increased powers to office holders to ensure that liquidators and administrators have a full tool box available to them in discharging their duties; (ii) provide welcome clarification to company officers regarding their obligations and; (iii) afford creditors enhanced protection.