Changes to Guernsey's insolvency regime in effect from 1 January 2023
The Companies (Guernsey) Law, 2008 (Insolvency) (Amendment) Ordinance, 2020 (the Ordinance) implements improvements to Guernsey's insolvency regime, and stems from a wide-ranging consultation finalised in 2017.
The Ordinance was approved by the States of Guernsey on 15 January 2020 and, together with a 2021 amendment Ordinance, was brought into force on 1 January 2023 by the Companies (Guernsey) Law, 2008 (Insolvency) (Amendment) Ordinance, 2020 (Commencement and Application) Regulations, 2022, made by the Committee for Economic Development.
A number of new insolvency rules which deal with operational aspects of new provisions came into effect at the same time as the Ordinance.
The changes represent the most significant development of Guernsey's insolvency law since 2008.
Latest Updates from our team
Changes to Guernsey's insolvency regime in force from 1 January 2023
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Long-awaited amendments to Guernsey's corporate insolvency legislation came into force on 1 January 2023. The amendments introduce a number of key changes to the law, covering liquidation, administration and office holders' powers. The new provisions only apply to liquidations or administrations commenced on or after 1 January 2023.
This Update provides an overview of the key changes.
Winding up foreign companies in Guernsey
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One of the changes to the regime is that, for the first time, foreign companies can be compulsorily wound up in Guernsey. The amendments introduce the concept of the 'non-Guernsey company' which applies to any overseas company (or other body prescribed for these purposes) but not a company registered in the Guernsey register of companies.
The new provisions are a welcome addition and reinforce Guernsey role as a leading international financial services centre.
Liquidators' new investigative powers
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The amendments to Guernsey's corporate insolvency legislation give liquidators more investigative powers and provide a statutory power for liquidators and administrators to set aside transactions at undervalue. One of the most powerful investigative weapons in any liquidator's armoury is the ability to compel the production from third parties of information and documents regarding the affairs of the company. Until recently, the precise scope of the liquidator's ability to seek production of such information or documents in Guernsey was uncertain, relying on ill-defined common law powers.
The reforms are important as they provide a number of new statutory powers of investigation that will assist with the effective winding up of companies.
Changes to voluntary liquidation in Guernsey
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The recent changes affect voluntary liquidations in a number of ways, including to:
• make a distinction between solvent and insolvent liquidations;
• make detailed provision for the functioning of creditor meetings;
• introduce the requirement for liquidators to report 'delinquent' officers to the Guernsey Registry and, in the case of regulated entities, to the GFSC;
• introduce the power to disclaim onerous property; and
• provide that companies in liquidation are now exempt from the requirement to have their accounts audited.
Our insolvency Guides
See our Guides for an overview of the following topics:
Insolvency procedures for Guernsey companies
Guernsey liquidations
Administration orders in Guernsey
The solvency test
Recognition of foreign insolvencies in Guernsey
Insolvency claims in Guernsey
Guernsey company restorations
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About Mourant
Mourant is a law firm-led, professional services business with over 60 years' experience in the financial services sector. We advise on the laws of the British Virgin Islands, the Cayman Islands, Guernsey, Jersey and Luxembourg and provide specialist entity management, governance, regulatory and consulting services.
