Changes in Guernsey's Insolvency Law have been approved by the island's government, the States of Guernsey.
Amendments to the island's 2008 Companies (Guernsey) Law will make Guernsey an even more desirable forum for insolvency proceedings, says Guernsey lawyer Alex Horsbrugh-Porter, Counsel at law firm Ogier.
"The new legislation is set to modernise Guernsey insolvency law, bringing the jurisdiction into line with not only the UK, but other offshore jurisdictions such as the British Virgin Islands and the Cayman Islands," he said.
The changes will affect all new liquidations and administrations and will come into force when regulations to that effect are made by the States Committee for Economic Development.
Mr Horsbrugh-Porter was among those who advised on the development of the new law through the pan-Channel Islands insolvency industry body ARIES.
"I believe that the necessary legislative tools are now in place to ensure that liquidators and administrators can quickly and efficiently gather in the assets of insolvent companies and return them to the creditors," he said.
Key developments include changes to voluntary winding up by company members; the power to demand documents and interview individuals; the power to disclaim; and the winding up of non-Guernsey companies.
"The new changes are to be welcomed and have shown that Guernsey is a modern progressive jurisdiction which is prepared to arm insolvency office holders with the necessary tools and powers to tackle, draw in and preserve the assets of an insolvent company for the benefit of creditors," Mr Horsbrugh-Porter continued.
"Former directors can no longer refuse to provide documents or answer questions and third parties that hold diverted company assets can now be more easily forced to return those assets.
"Administrations are also likely to be cheaper as administrators can now distribute assets to secured and preferential creditors and then place the company straight into dissolution if there no further assets to distribute and liquidators can now rid themselves of unwanted contracts and property.
"All this will likely save money and preserve assets for creditors, and is a welcome and substantive change which finally brings Guernsey into line with many other Commonwealth jurisdictions."
Mr Horsbrugh-Porter has written about the new changes in greater detail at the Ogier website. The article can be found here.
The law changes have also been welcomed by other lawyers and insolvency practitioners.
Ben Rhodes, Director at Grant Thornton Channel Islands, said: "Clear and effective insolvency laws are essential for a modern economy. The changes to the insolvency law will provide certainty to those doing business in Guernsey or transacting with the jurisdiction and will further enhance our reputation as a leading specialist finance centre."
David Jones, Partner at law firm Carey Olsen and restructuring specialist, said: "It is increasingly important for Guernsey, as a jurisdiction, to demonstrate that it is capable and forward thinking in this area as levels of distress in certain markets increase."
A briefing from Carey Olsen can be found here: https://www.careyolsen.com/briefings/reforms-guernseys-insolvency-laws-be-introduced
For more information about Guernsey's finance industry please visit www.weareguernsey.com.
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