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Legal Guide to PreEnforcement Steps Under Jersey and Guernsey law

Sep 15, 2022

Advisory
A sleek black pen with 'Walkers' branding lies atop a closed notebook, both featuring raised 'Walkers' logos.

key takeaways

  • There are a number of pre-enforcement steps that should be taken prior to taking action in Jersey and Guernsey.
  • Secured parties have specific duties under Guernsey and Jersey law to comply with when taking enforcement action.
  • Certain practical issues relating to KYC and stock transfer forms may arise when enforcing share and account security.

In September 2020, only months into what we now know was to become a two-year Global Pandemic, we looked at what Covid-19 might mean for businesses and their creditors. At that time we had seen some high profile casualties – Debenhams, DW Sport, Monsoon, Laura Ashley and Virgin Media – and were anticipating further defaults and insolvencies in a number of sectors of the UK economy.

Whilst there certainly was distress, government support (in the form of CBILS and rent moratoria, amongst other measures) and a general theme of creditor forbearance was, in many cases, sufficient to prop up businesses throughout the duration of the pandemic.

However, as we emerge from the Global Pandemic, the impact of the conflict in Ukraine poses further global concern and rising energy prices are putting businesses under extreme pressure. Inflation, increasing interest rates in a bid to combat such inflation, the cost-of-living impact on consumer spending and supply chain issues (coming out of Covid) are also adding to a worsening economic climate.

In light of the above we expect creditors to be increasingly examining enforcement options alongside continuing to pursue consensual work-outs to combat distress.

Given the popularity of Jersey and Guernsey holding structures for investment into the UK, secured creditors with exposure to such structures will need legal advice in those jurisdictions where enforcement strategies are being considered.

Enforcement of share security over Jersey or Guernsey companies in those structures will generally be one of the enforcement options.

With that in mind, it is a good time for secured creditors with Jersey and/or Guernsey share security to consider steps that they can take now to make a future enforcement of that security as efficient as possible.

Such steps include:

In September 2020, only months into what we now know was to become a two-year Global Pandemic, we looked at what Covid-19 might mean for businesses and their creditors. At that time we had seen some high profile casualties – Debenhams, DW Sport, Monsoon, Laura Ashley and Virgin Media – and were anticipating further defaults and insolvencies in a number of sectors of the UK economy.

  • ensuring that fully executed copies of the security documents are available;
  • ensuring that those security documents have been reviewed by Jersey/Guernsey counsel (as applicable) and any issues that may impact on enforcement have been addressed;
  • ensuring that the security interests remain attached and perfected;
  • locating the original share certificates and security stock transfer forms that will be required should the secured shares be transferred (whether as a further perfection step outside of a formal enforcement or as a means of enforcement);
  • arranging for full CDD/KYC information to be collated for (i) any potential transferees of the secured shares and (ii) new directors of the target company that the secured creditor may wish to appoint using the voting rights on the secured shares should this be permitted by the underlying security documents;
  • engaging with valuation experts and developing a plan for the valuation and marketing of the secured assets;
  • ensuring that there are no regulatory or other consents required in connection with the proposed enforcement steps; and
  • ensuring that where the security has been given in support of a foreign law loan obligation, the enforcement is consistent with the terms of the foreign law loan documentation and the enforcement process is coordinated amongst both Jersey/Guernsey and foreign law counsel.
  • enforcement steps in relation to Jersey and Guernsey share security must be taken in accordance with the underlying security documents and the relevant legislation in each jurisdiction (being the Security Interests (Jersey) Law 2012 in Jersey and the Security Interests (Guernsey) Law, 1993 in Guernsey). Legal advice is therefore key.

You can read our full notes on the enforcement of Jersey and Guernsey share security here:

  • Enforcement of Jersey Security
  • Enforcement of Guernsey Security

The Walkers Restructuring and Insolvency team has been consistently ranked as the offshore market leaders, with teams in the Asian, Caribbean and European timezones advising on Bermudan, BVI, Cayman, Guernsey, Irish and Jersey law. The Jersey team has acted on one of the very few known enforcements of share security under the Security Interests (Jersey) Law 2012 and so have valuable practical experience on enforcement under what is a relatively new piece of legislation.

Authors

Zoe Hallam

Zoë Hallam

Group Partner/Guernsey

T/+44 (0) 1481 748 920
M/+44 (0) 7781 176 054
E/Email Zoë Hallam
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Kim Paiva

Kim Paiva

Group Partner/Guernsey

T/+44 (0) 1481 748 906
M/+44 (0) 7781 134 219
E/Email Kim Paiva
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Alex Wickens

Alex Wickens

Group Partner*/Guernsey

T/+44 (0) 1481 758 954
M/+44 (0) 7911 145 107
E/Email Alex Wickens
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Julia Keppe

Julia Keppe

Partner, Walkers (CI) LP/Jersey

T/+44 (0) 1534 700 728
M/07797 797321
E/Email Julia Keppe
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Jon Le Rossignol

Partner, Walkers (CI) LP/Jersey/London

T/+44 (0) 1534 700 716
M/+44 (0) 7797 792 998
E/Email Jon Le Rossignol
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Louise Hamilton

Louise Hamilton

Senior Counsel/Jersey

T/+44 (0) 1534 700 723
M/+44 (0) 7797 968 425
E/Email Louise Hamilton
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Elaine Kelly

Elaine Kelly

Senior Counsel/Jersey

T/+44 (0) 1534 700 721
M/+44 (0) 7797 850 572
E/Email Elaine Kelly
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KEY CONTACTS

Get in touch with our team

Zoë Hallam
Zoe Hallam

Zoë Hallam

Group Partner

Guernsey

T

+44 (0) 1481 748 920

M

+44 (0) 7781 176 054

E

Email Zoë Hallam
View profile
Kim Paiva
Kim Paiva

Kim Paiva

Group Partner

Guernsey

T

+44 (0) 1481 748 906

M

+44 (0) 7781 134 219

E

Email Kim Paiva
View profile
Alex Wickens
Alex Wickens

Alex Wickens

Group Partner*

Guernsey

T

+44 (0) 1481 758 954

M

+44 (0) 7911 145 107

E

Email Alex Wickens
View profile
Julia Keppe
Julia Keppe

Julia Keppe

Partner, Walkers (CI) LP

Jersey

T

+44 (0) 1534 700 728

M

07797 797321

E

Email Julia Keppe
View profile
Jon Le Rossignol

Jon Le Rossignol

Partner, Walkers (CI) LP

Jersey

London

T

+44 (0) 1534 700 716

M

+44 (0) 7797 792 998

E

Email Jon Le Rossignol
View profile
Louise Hamilton
Louise Hamilton

Louise Hamilton

Senior Counsel

Jersey

T

+44 (0) 1534 700 723

M

+44 (0) 7797 968 425

E

Email Louise Hamilton
View profile
Elaine Kelly
Elaine Kelly

Elaine Kelly

Senior Counsel

Jersey

T

+44 (0) 1534 700 721

M

+44 (0) 7797 850 572

E

Email Elaine Kelly
View profile

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