Just and equitable winding up in Jersey: Still a flexible friend?

• Despite ongoing developments in Jersey insolvency law, just and equitable winding up remains a flexible tool, that can be utilised in a wide range of circumstances.
  
  
• Jersey courts, while exercising caution before ordering just and equitable winding up will do so where it has benefits for creditors over the usual insolvency procedures, and will assess cases subjectively, based on their specific facts.
  
  
• As limitations in Jersey insolvency law gradually decrease - for instance, with the introduction of creditor's winding up in 2022 and the anticipated introduction of an administration procedure - the Royal Court consistently demonstrates a pragmatic approach to corporate insolvencies, ensuring the best outcomes for creditors.

Just and equitable winding up is provided for by Article 155 of the Companies (Jersey) Law 1991 (the Law) which states that: 

• A company, not being a company in respect of which a declaration has been made (and not re-called) under the Désastre Law may be wound up by the court if the court is of the opinion that:
  
  
  
  • It is just and equitable to do so; or
  • It is expedient to do so.

• If the court orders a company to be wound up under this article it may:
  
  
  
  • appoint a liquidator
  • direct the manner in which the winding-up is to be conducted; and
  • make such orders as it sees fit to ensure the winding up is conducted in an orderly manner

Evidently, the Royal Court has a broad jurisdiction under Article 155 of the Law.  In the case of Re Leveraged Income Fund Limited¹, the Court observed that, while the article is based on a similar provision in UK law, the Royal Court is not restricted to the same categories of cases in which the UK courts exclusively exercise their power to order a just and equitable winding up. 

An application under Article 155 of the Law can be made to the Royal Court by the company, a director, a shareholder, the Minister for external relations, the Minister for Treasury and Resources (in certain circumstances), the Jersey Financial Services Commission, or by a supervisory body within the meaning of the Proceeds of Crime (Supervisory Bodies) Law 2008².  

There is no requirement for a company to be insolvent at the time of the application. However, where a company is insolvent there will be a presumption by the court in favour of ordering a creditors' winding up and good reason must be provided to persuade the court to order a just and equitable winding up instead³. 

'Creative' applications of article 155 

It is well established in Jersey that Article 155 of the Law warrants a flexible interpretation - justice and equity not being confinable to 'the four corners of specific circumstances'⁴. The Royal Court has demonstrated a willingness to use their broad power and discretion under Article 155 of the Law to avail itself of tools not plainly available under other provisions of Jersey law.  

In Re Representation of Julian Charles Tyake⁹, the Royal Court ordered a just and equitable winding up for five Jersey companies within a complex, multi-jurisdictional group. The Court considered: 

• the group's complex structure, 
• the high-risk location of certain assets, 
• the need to avoid creditor notice to prevent dissipation and relying on Poundworld as authority that an insolvent company can be just and equitably wound up.

These cases show the Royal Court’s willingness to use its wide jurisdiction to order just and equitable winding up in diverse circumstances, to achieve the best outcome for creditors.

Current standing

As Jersey's law on just and equitable winding-up is continuing to evolve, there is no definitive list of circumstances such orders will be made. The following examples show situations in which the Court is likely to use its powers under Article 155 of the Law¹⁰: 

• loss of substratum: The company’s purpose has been fulfilled or cannot be achieved (including an impasse short of deadlock). In the matter of Draganfly Investments Limited¹¹, the company was deemed to have lost its substratum as it could not trade. The Court therefore ordered a winding up of the company on just and equitable grounds. More recently in the Representation of Transtech Glass Investment Limited¹² (Transtech Glass), the Royal Court ordered the just and equitable winding up of a holding company that had lost its underlying purpose following the insolvency (and impending insolvency) of its subsidiaries. 
  
  
• unsuitability of other insolvency processes: for example, where a company is balance sheet insolvent rather than cash flow (as required under Jersey law). In this scenario the company cannot be placed into a summary winding up and it may be inappropriate to wait for the company to become cash flow insolvent to protect the interests of creditors.
  
  
• complex or technical affairs: where complexity makes a specialist insolvency practitioner preferable. In Transtech Glass the Court noted that a just and equitable winding up can secure practitioners with relevant expertise, producing a more efficient winding up (compared with the désastre procedure). This ground is less likely to be used less now that creditor-initiated creditors’ winding up exists in Jersey.
  
  
• deadlock: management deadlock preventing decisions on the business. In Bisson v Bish¹³ the shareholding structure, lack of a shareholder agreement and breakdown in relations made passing a resolution impossible; the Court found this a clear case for winding up on just and equitable grounds. 
  
  
• justifiable loss of confidence due to mismanagement: a loss of confidence in the probity of the management of the company, e.g. the controlling director has treated the business as his own, even if the conduct is not unlawful.
  
  
• expulsion of 'working partner': in the context of a quasi-partnership, there has been an exclusion from management (unless the shareholder has brought that exclusion upon himself by his own misconduct).
  
  
• breakdown of trust and confidence: in the context of a quasi-partnership, there has been an irretrievable breakdown in the relationship of trust and confidence between the shareholders having regards to every aspect of that relationship (unless the shareholder is solely responsible for the breakdown in trust and confidence).
  
  
• where serious questions regarding the affairs of the company are required to be investigated: where the affairs of the company are required to be investigated (e.g. where there are allegations that the principal creditor has acted as a shadow director and caused preferential payments to be made as was the case of Sienna Properties. 

The outlook for just and equitable winding up in Jersey

The consultation on proposals to amend the Law to introduce an administration procedure to Jersey, and further amend creditors' winding up came to an end in December 2024. Whilst the introduction of new insolvency procedures will likely reduce reliance on Article 155 of the Law, as can be seen by Article 155 of the Law's continued application following the introduction on creditors' winding up on 1 March 2022,¹⁴ the Jersey Court will continue to make use of Article 155 where it considers it will provide better outcomes for creditors. 

Despite advancements in insolvency mechanisms in Jersey Law, just and equitable winding up remains a flexible friend, and illustrates the Royal Court's well-established approach to insolvency matters more generally - which is to facilitate the best outcome for creditors and its willingness to use its powers creatively to achieve this goal. 

_{1 [2002] JLR 209
2 Article 155(2) of the Law 
3 In the matter of Siena Properties (Jersey) Limited and Others [2025] JRC 067 (Sienna Properties)
4 Jean v Murfitt (Jersey Unreported 11 December 1996) 
5 [2009] JRC 042
6 [2011] JRC 155
7 In Jersey the test for insolvency is cash flow insolvency i.e. a company is unable to pay its debts as they fall due. 
8 [2013] JRC 096
9 [2018] JRC 237
10 See in Financial Technology Ventures (II) Q LP & Ors v ETFS Capital Limited & Graham Tuckwell [2021] JRC 025 at 49 
11 [2020] JRC 103
12 [2025] JRC 069
13 [2008] JRC 193
14 Companies (Amendment No.8) (Jersey) Regulations 2022}