PLACING A JERSEY COMPANY INTO ADMINISTRATION IN JERSEY

On 19 June 2026, the Companies (Jersey) Law 1991 (the Companies Law) was amended to add a new Part 20B which provides for an administration procedure for Jersey companies including incorporated cell companies (ICCs) and their incorporated cells (ICs) but excluding protected cell companies and their protected cells.

The purpose of an administration order

Administration is an insolvency procedure that provides for the appointment by the Jersey court of an administrator to manage the affairs of a company that is, or is likely to become, insolvent on a cash flow basis. An administration order may only be made for the purpose of: (a) rescuing the company or the whole or any part of its undertaking as a going concern; and/or (b) a more advantageous realisation of the company’s assets than would be achieved by a winding up. An administration order may be made even if the company is being wound up, but not if the company’s assets have been declared en désastre (ie bankrupt). There is no out-of-court method of commencing an administration.

A principal feature of administration is the imposition of a moratorium against unsecured creditor claims. While an administration order is in force: (a) no application can be brought to wind up the company or to declare its assets en désastre; (b) the company cannot commence a winding up; and (c) no action or legal proceedings can be commenced or continued against the company without consent of the administrator or leave of the court. However, the moratorium does not apply to secured parties who may enforce their security over all or any of the company’s assets.

Administration, therefore, can be used as a rescue procedure, and is designed to give a company an opportunity to trade out of difficulties or to enable a better realisation for creditors. Administration is not, therefore, necessarily a terminal process albeit companies that enter administration proceedings are typically liquidated.

Application for an administration order

An application can be made by: (a) a company; (b) a creditor of a company with a liquidated claim of at least £3,000 (provided that it has not agreed not to make an application and its claim is not only for repossession of goods); (c) a liquidator or provisional liquidator (if one has been appointed); (d) an ICC in respect of an IC or vice versa; and (e) the Minister for External Relations to protect the public interest.

Notice of the application must be served on: (a) the company; (b) in the case of an ICC, each IC; (c) in the case of an IC, the ICC; (d) a secured creditor¹; (e) the Viscount (the executive officer of the Jersey court who administers désastres); and (f) other persons directed by the Jersey court including any creditor. A person receiving notice may attend court and make representations before any order is made.

Making an administration order

When the court makes an administration order, it must appoint one or more administrators and specify the purpose for which the order is made. The administration commences the day the order is made. An administrator can only be selected from those named on the Register of Approved Liquidators and Administrators (the Register). To be entered on the Register, an administrator must be: (i) a Jersey resident; (ii) either licenced to act as an insolvency practitioner in the UK or a qualified accountant in the UK or Ireland; and (iii) has in place both a general a bond of £750,000 and a specific bond of between £5,000 and £5,000,000 for each appointment. If more than one administrator is appointed, one must be Jersey resident.

Upon hearing an application for administration, the court may on such terms or conditions it thinks fit: (a) grant or dismiss the application; (b) adjourn the hearing; (c) request further information; or (d) convene other parties.

Notice of an administration order

Unless the court otherwise orders, the administrator must give notice within 14 days of the making of the administration order to the Registrar of Companies (the Registrar), the Viscount, the company, all known creditors and to anyone else the court orders. In the case of an ICC, notice must be given to its ICs. In the case of an IC, notice must be given to its ICC. Notice must also be published in the Jersey Gazette.

The notice to creditors must be accompanied by an invitation to an initial meeting of creditors and an explanation of the purpose, and likely process, of the administration. The initial meeting of creditors must be held within ten weeks of the date of the administration order, or such other date as the court directs. The court may dispense the requirement for an initial meeting.

Conduct of an administration

During the period an administration order is in force, the administrator must manage the affairs, business and property of the company. An administrator is given broad powers to this end which are set out in Schedule A1 of the Companies Law. These also include the power to remove and appoint directors, call a meeting of members or creditors and to apply to wind up the company.

The company’s directors remain in office during the administration, but they may not perform their functions in a way that interferes with the performance of the administrator’s functions as administrator, unless the administrator consents.

An administrator of an ICC must cooperate in the management of the affairs, business and property of the ICs of the ICC and an administrator of an IC must similarly cooperate with the ICC provided, in either case, that the cooperation does not interfere with the performance of the administrator’s functions as administrator.

The administrator or the court may require anyone who is or was in the year before the order was made, an officer, secretary or employee of the company to submit to the administrator within 21 days a statement of affairs verified by affidavit. Such persons are also required to give the administrator such information concerning the company as the administrator may require, to attend on the administrator when requested and notify the administrator of a change of address, employment or name.

An administrator may apply to court for directions, and the court has the power to make an order in relation to the extent or performance of any function or any other matter arising during the administration.

An administrator may make a distribution to a creditor of the company if the administrator thinks it is likely to assist the achievement of a purpose of the administration order. However, an administrator may not, without leave of the court, make a distribution to a creditor if the creditor does not have: (a) a secured interest; or (b) a preferred debt for the purposes of the Bankruptcy (Désastre) (Jersey) Law 1990 (ie a claim for wages or salary, rent, tax, social security or rates).

An administrator may apply to court to have transactions at an undervalue, preferences and extortionate credit transactions set aside. It is unclear whether an administrator has the power to disclaim onerous property (including contract leases) but this will likely be raised with the Royal Court for clarification soon.

If an administration continues for more than 12 months, the administrator must call a general meeting of the company and a meeting of the creditors within three months of the end of the 12 months from either the start of the administration or each subsequent period of 12 months from the start of the administration (or longer period as the court allows). The administrator must lay before the meeting an account of the administrator’s acts and dealings and of the conduct of the administration during the relevant 12-month period.

Administrator’s liability, remuneration and tenure

The liability of an administrator in the conduct of an administration is limited. The administrator acts as an agent of the company but does not incur personal liability unless the administrator is fraudulent, reckless, negligent or acts in bad faith.

The administrator’s remuneration and other costs, charges and expenses of the administration are paid from the company’s assets in priority to all other unsecured claims. These may also be paid by a third party. The court can fix the administrator’s fees.

An administrator: (a) may be removed from office by the court; (b) resign by giving notice to the court; or (c) vacate office if the administration order is discharged. The court may appoint a replacement. An administration does not cease if there is a vacancy in the office of administrator.

A person who ceases to be administrator is released from the time determined by the court unless the person dies in which case they are released when notice is given to the court. With effect from the time of release, the person is discharged from all liability in respect of their acts and omissions in the administration unless they have been fraudulent, reckless, negligent, have acted in bad faith or the court otherwise orders. An order granting release may be revoked on proof of: (a) fraud; (b) the omission, suppression, concealment or misrepresentation of any material fact; or (c) any submission, statement, pleading or document made or presented to the court being false, deceptive or misleading.

Discharge or variation of an administration order

The administrator may apply to court at any time for an administration order to be discharged or varied and must apply if the purpose specified in the order has been achieved or is incapable of being achieved. On hearing the application, the court may, on terms and conditions it thinks fit, grant or dismiss the application, adjourn the hearing or make an interim or other order (including to wind up the company).

The administrator must send a copy of the order effecting a discharge or variation of the administration order to the Registrar, the Viscount and all known creditors within seven days of the date of the order and to anyone else, and within the time period, the court orders.

If the court discharges the order in circumstances in which the company has no assets that might permit a distribution to its creditors, the court may order the company to be dissolved on a specific date.

Assuming a company is not wound up or dissolved, once the administration order is discharged, the company’s directors will resume day-to-day management of the company.

Protection of creditors and members

While an administration order is in force, a director, creditor or member of the company or any other person appearing to the court to be interested may apply to the court for an order on the ground that: (a) the company’s affairs, business and property are being or have been managed by the administrator in a manner that is unfairly prejudicial to the interests of all or any of its creditors or members; (b) any actual or proposed act or omission of the administrator is or would be unfairly prejudicial; or (c) it would otherwise be desirable or necessary for an order to be made.

The court may, on terms and conditions it thinks fit, dismiss the application, make an order giving relief in respect of the matters complained of, adjourn the hearing or make an interim or other order. If the administration order is discharged, the administrator must file a copy of the discharge order to the Registrar within seven days of the date of discharge and to anyone else, and within the time period, the court orders.

Jersey versus English administration

Jersey companies often have most, if not all, their assets located in the UK, particularly companies holding UK real estate. In such cases, despite the introduction of an administration procedure in Jersey, it will still be possible to apply to the Jersey court to issue a letter of request to the High Court in England or the Court of Session in Scotland to place a Jersey company into administration in England and Wales or Scotland. If a Jersey company’s assets are located in the UK, and it is the wish of the company and its secured creditors that the company be placed into administration in the UK, it is unlikely, in our view, that the Jersey court would decline to exercise its inherent jurisdiction to issue a letter of request merely because the company could be placed into administration in Jersey.

The Jersey court has stated that, when exercising its discretion whether to issue a letter of request, it is now desirable for the Court to have a note identifying the differences between potential insolvency remedies available in Jersey and for the proposed other jurisdiction.² The potential benefits a UK administration over a Jersey administration would be that: (a) there would be a moratorium on the enforcement of security;³ (b) one of the purposes of a UK administration is realising property to make a distribution to one or more secured or preferential creditors; and (c) where an administrator realises property, the administrator will do so as agent of the company and will be liable in negligence if property is realised at an undervalue, whereas if a secured party enforces Jersey security, it will be liable in damages if collateral is realised at an undervalue.

Where a Jersey company has a sufficient connection with the UK, it is unlikely the High Court or Court of Session would decline to place a Jersey company into administration merely because it could be placed into administration in Jersey.

It remains to be seen whether the Jersey court will either require a secured party to enforce its Jersey security or whether it will permit an administrator to realise company property subject to Jersey security with the secured party’s consent and subject to its priority. We anticipate that the Jersey court will permit administrators to realise Jersey collateral in this way. If this occurs, then the practical differences between English and Jersey administration will be insignificant.

The experience in Guernsey is that administration is typically started in Guernsey and administrators seek recognition of their appointment in England often with receivers also being appointed over UK assets at the same time.

Pre-packaged sales

Although the administration provisions of the Companies Law do not expressly contemplate pre-packaged sales, they will nevertheless be possible. The Jersey court has authorised a pre-packaged sale in the context of a just and equitable winding up and the same principles applied by the court would be equally applicable in an administration.⁴ The Guernsey court applied the same principles in the context of authorising a pre-packaged sale in an administration of a Guernsey company.⁵ The Jersey administration procedure is modelled on Guernsey’s. The judgments make clear that an application to authorise a pre-packaged sale should be supported by a statement prepared by administrators in accordance with Statement of Insolvency Practice 16 on Pre-Packaged Sales in Administrations (SIP 16) issued by the Joint Insolvency Committee in the UK.