The following Restructuring & Insolvency guidance note Produced in partnership with Simon Davies, Mathew Newman and Alex Horsbrugh-Porter of Ogier Group provides comprehensive and up to date legal information covering:
All formal insolvencies and reorganisations of Guernsey companies are governed by the Companies (Guernsey) Law, 2008 (Companies Law) which deals with schemes of arrangement, administrations and liquidations of Guernsey companies, together with specific insolvency legislation related to cellular companies and cells. Less formal collective insolvency procedures also exist (known as désastre and saisie) although these are not governed by legislation because they derive from the customary law which has existed in Guernsey since at least medieval times.
Limited partnerships can be subject to a winding-up process known as dissolution under the Limited Partnerships (Guernsey) Law, 1995 (as amended) (LP Law). In addition, the Loi Relative aux Debiteurs et Renonciation, 1929 (which is in the French language) (1929 Law) applies to all types of debtor, including individuals. There is no specific bankruptcy/personal insolvency legislation in Guernsey. Preferential debts are governed by the Preferred Debts (Guernsey) Law, 1983 as amended by the Preferred Debts, Désastre Proceedings and Miscellaneous Provisions (Guernsey and Alderney) Law, 2006. If the debtor is a company, the test for insolvency is whether the company is either cash flow insolvent (ie it cannot pay its debts as they fall due) or balance sheet insolvent (ie its assets are less than its liabilities)—see section 527 of the Companies Law which is known as the Solvency Test. In addition, evidence that a company has failed to meet a demand for payment of a debt served by a creditor is prima facie evidence that the company is unable to
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