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Court Clears Way for Insolvency Proceedings

25th September, 2013

When there is an overseas element in business structures, issues of jurisdiction can sometimes cause problems.

When a Jersey company was unable to repay a £6 million loan from its bank, advanced in respect of a property development in Kent, the bank and the director of the company agreed that a period of administration under English law would be advisable. It was intended that the period of administration would be followed by the sale of the properties.

A request was therefore made to the Royal Court of Jersey that it should supply the bank with a letter asking the High Court in England to make an administration order. However, the English Court considered that it lacked jurisdiction to make the order, since the company was Jersey resident and no insolvency proceedings had been begun in Jersey.

The Court of Appeal overturned that decision, concluding that the English High Court did have jurisdiction to ‘assist’ in such circumstances.

To discuss this or other issues please contact Nick Clarke on 01244 405558 or email [email protected]

 

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