Adam Cole
Partner
Guernsey
This article was first published in the August 2026 South Square Digest.
The introduction of administration represents phase 2 of Jersey's 2026 company law reforms, following the phase 1 amendments which came into force on 1 June 2026 and which are intended to enhance the clarity, efficiency and legal certainty for companies, stakeholders and advisers, while preserving the core features that have made Jersey a jurisdiction of choice for complex cross-border transactions, investment funds and private wealth.
Taken together, the two phases constitute a comprehensive modernisation of the Companies Law.
This article examines the key provisions of the new administration regime before turning to consider its advantages and its place in global restructuring.
The need for a rescue process
Jersey has, until 19 June 2026, lacked a corporate rescue procedure. All of the other insolvency procedures are terminal.
The just and equitable winding up procedure has been used (arguably beyond its natural and proper purpose) as a quasi-administration process, to enable, for example, an insolvent company to trade for a further limited period or to facilitate a pre-pack sale. However, the process will still end with the dissolution of the company.
Recourse has also been had to applications for letters of request to the High Court of England & Wales or Court of Session in Scotland to place a Jersey company into administration pursuant to section 426 of the UK Insolvency Act 1986.¹
This has resulted in a well-trodden path of "passporting" Jersey companies into administration in the UK. However, pursuing this route will now be a matter of choice rather than necessity, given the introduction of a domestic rescue process in Jersey.²
Core mechanics: how the regime works
The statutory purposes
The administration regime is built around two statutory purposes.
The Royal Court of Jersey ('Jersey Court') may make an administration order where it is satisfied that the company is, or is likely to become, insolvent - using a cash flow test (i.e. can the company pay its debts as they fall due) - and that making the order is reasonably likely to achieve either or both of:
- the rescuing of the company, or the whole or any part of its undertaking, as a going concern; or
- a more advantageous realisation of the company's assets than would be achieved by a winding up.
Who may apply
An application for an administration order may be made by the following:
- the company;
- a creditor of the company with a liquidated claim of not less than the prescribed minimum liquidated sum (currently £3,000);
- a liquidator (including a provisional liquidator);
- a cell of an incorporated cell company, in the case of an incorporated cell company;
- an incorporated cell company, in the case of a cell of an incorporated cell company; and
- the Minister for External Relations, where it is necessary to safeguard the public interest.
A creditor may not make an application where it has agreed not to do so or where its only claim is for the repossession of goods.
How to apply
An application for an administration order must be made in the form approved by the Jersey Court and must be accompanied by an affidavit verifying the content of the form.
Notice of the application must be given to the company, the Viscount of Jersey (being the head of the executive arm of the Jersey courts) (the 'Viscount'), and such other persons as the Jersey Court directs, including any creditor.
In addition, under the Companies (Secured Creditors and Notice of Application for Administration Order) (Jersey) Order 2026, unless the Jersey Court orders otherwise, 5 working days' notice must be given to any secured creditor before an application is heard. This is to enable a secured creditor to make representations at the hearing should they wish to.
Making the order
The Jersey Court retains a broad discretion as to whether to make an administration order.
On hearing the application, it may grant or dismiss it, adjourn the hearing (conditionally or unconditionally), request further information, or convene other parties.
The Jersey Court cannot make an administration order if the assets of the company have already been declared en désastre.
Désastre is a Jersey bankruptcy process which results in the vesting of the debtor's property, wherever situated, in the Viscount. Following the introduction of a court ordered creditors' winding up procedure into the Companies Law (being an insolvent liquidation), less recourse has been had to the désastre regime in a corporate context but it still plays an important role and remains the primary insolvency option for individual debtors.
The Jersey Court can make an administration order where a winding up order has been made or a shareholder winding up resolution has been passed. Where the Jersey Court makes an administration order in such circumstances, the existing winding up order is discharged or the shareholder winding up resolution ceases to have effect.
Safeguard
A safeguard is built into the framework to deter the potential abuse of the administration regime.
If an administration order is made on the application of a creditor and:
- the company was not insolvent or likely to become insolvent at the date of the application; and
- the administration order is later discharged,
then the company has a right of action against the applicant to recover damages for or in respect of any loss sustained by the company as a consequence of the order, unless the applicant, in making the application, acted reasonably and in good faith.
The moratorium
Upon the making of an administration order, a statutory moratorium becomes effective which means that:
- no resolution may be passed, or order made, for the company's winding up or order made that the property of the company be placed en désastre; and
- no action or legal proceeding may be commenced or continued against the company except with the consent of the administrator or the leave of the Jersey Court.
The moratorium provides the essential breathing space for the administrator to review the operation of the business and develop a plan to assist it, while also preserving equality between unsecured creditors.
Unlike the position in England, the enforcement of security under the Jersey regime is excluded from the moratorium altogether. More specifically, the moratorium does not prevent a person with security over the whole or any part of the company's assets from:
- enforcing that security;
- exercising contractual rights under the security agreement;
- making a court application under Article 52 of the Security Interests (Jersey) Law 2012; or
- commencing or continuing any action or legal proceeding to enforce a hypothec over Jersey immovable property.
This means that secured creditors are not prejudiced by the administration, and their enforcement rights remain fully intact throughout, heightening the need for administrators to work collaboratively with them in relation to the company's future.
The administrator: qualification, powers, and duties
The administrator must be on the Register of Approved Liquidators and Administrators maintained by the Viscount (the 'Jersey Register').
To be eligible, a practitioner must be ordinarily resident in Jersey, have an appropriate level of experience (as determined by the Viscount), hold a UK insolvency practitioner licence or be a member of one of the listed accountancy bodies, and have in place a general bond of £750,000 plus a specific bond of between £5,000 and £5,000,000 for each appointment.
A non-resident administrator may be added to the Jersey Register and appointed alongside a resident administrator.
The administrator may do all things that are necessary for the management of the affairs, business and property of the company. Schedule A1 of the Companies Law sets out a comprehensive (but non-exhaustive) list of administrator powers, including the power to take possession of and sell company property, borrow money and grant security, bring or defend legal proceedings, appoint agents and professionals, and employ and dismiss employees.
The administrator acts as the agent of the company and is excused from personal liability except to the extent that the administrator is fraudulent, reckless, negligent, or acts in bad faith.
Any director, creditor, member, or other interested person may apply to the Jersey Court at any time during the administration for an order on the ground that the company's affairs, business and property are being managed by the administrator in a manner that is unfairly prejudicial to the interests of creditors or members, that an act or omission is or would be unfairly prejudicial or that it would otherwise be desirable or necessary for the Jersey Court to make an order.
The Jersey Court's powers on such an application are broad and include the power to regulate the future management of the company's affairs, business and property and to discharge the administration order with such consequential provision that the Jersey Court thinks fit.
Unless the Jersey Court orders otherwise, the administrator has the same powers that a liquidator has in a creditors' winding up concerning transactions at an undervalue, preferences and extortionate credit transactions.
Cooperation with the administrator
If an administration order is made, the administrator may require the following to submit within 21 days a statement of affairs of the company, verified by affidavit:
- a person who is or has been an officer or secretary of the company;
- a person who has taken part in the company's formation at any time within the period of 1 year that ends with the date of the administration order (the 'Preceding Year');
- a person who is in the company's employment or has been in its employment within the Preceding Year and is, in the administrator's opinion, capable of giving the information required;
- a person who is or has within the Preceding Year been an officer or secretary of, or in the employment of, a company that is, or within the Preceding Year was, an officer or secretary of the company; or
- with the leave of the Jersey Court, any other person.
Neither the company nor its officers may take any steps which interfere with the performance by the administrator of their functions, except with the consent of the administrator.
The administrator also has the benefit of a power under the Companies Law to require co-operation from specified individuals to give to the administrator information and documentation concerning the company and its promotion, formation, business, dealings, affairs or property which the administrator may reasonably require.
How administration concludes
The Companies Law envisages that the administrator will apply to the Jersey Court for the administration order to be discharged.
The administrator must make such an application if it appears that the purpose of the administration has been achieved or is incapable of being achieved. However, the administrator may also apply to the Jersey Court at any time for the administration order to be discharged if the administrator considers it appropriate.
The Jersey Court has wide powers on such an application, including the power to make any order it thinks fit (including an order for the winding up of the company).
If an administration order is discharged and it appears to the Jersey Court that the company has no assets that might permit a distribution to creditors, the Jersey Court may order its dissolution on a specified date.
Advantages of the new regime
The introduction of the administration regime confers a number of significant advantages.
It is Jersey's first true corporate rescue process. It enables earlier, and more efficient, restructuring of viable businesses, with the prospect of higher creditor recoveries, job preservation, and the continuation of economic activity. Ultimately, the intention is to promote a materially better outcome for stakeholders when compared to winding up or désastre.
Although there will be circumstances where it remains advantageous to place a Jersey company into a foreign administration process, this will now be a matter of strategic choice rather than necessity.
The administration regime is modelled on familiar and well-understood concepts. It will be readily understandable to the international insolvency community, with many of the provisions being the same as, or similar to, those found in other jurisdictions.
The policy decision to exclude secured creditor rights from the statutory moratorium (consistent with the treatment of secured creditors in a creditors' (insolvent) winding up) will continue to instil market confidence that secured creditor rights will remain a paramount consideration under the Companies Law and more generally.
A Guernsey perspective
Part XXI of the Companies (Guernsey) Law, 2008 provides a consolidated administration regime for limited companies, protected cell companies, incorporated cell companies and their cells.
The Guernsey statutory framework has become an often used and relatively adaptable tool in Guernsey insolvency matters. Having been in effect for nearly 20 years, Guernsey's regime may also offer a useful lens through which Jersey’s new framework can be considered, and a natural point of comparison given the close ties between the two Crown Dependencies.
The statutory purposes underpinning the jurisdictions' regimes are closely aligned. One point of difference is that the solvency test under Guernsey law includes reference to the balance sheet test and, as such, a Guernsey company may be considered insolvent if it cannot pay its debts as they fall due or if the value of its liabilities exceeds the value of its assets.
As with the new Jersey regime, the moratorium which takes effect upon the making of a Guernsey administration order does not affect a secured creditor's right to enforce its security. This was a deliberate policy choice in Guernsey, and the Islands' shared approach may be seen as part of a consistent creditor-friendly policy that preserves secured creditor interests as a cornerstone of the statutory framework.
Similar to the Jersey approach, a Guernsey administration is a court-based procedure. This provides an important degree of judicial oversight at the point of entry, albeit that there is a relatively wide-range of persons who may apply in Guernsey including the company, its directors, any member, any creditor (including any contingent or prospective creditor) and, in respect of supervised companies engaged in financial services business, the Guernsey Financial Services Commission.
Guernsey's administration framework has not been set in aspic since 2008. By way of example, the Companies (Guernsey) Law, 2008 (Insolvency) (Amendment) Ordinance, 2020, which came into effect on 1 January 2023, included enhanced powers for administrators to compel the production of documents and information from directors and officers, a statutory obligation on office holders to report director misconduct, new statutory remedies for the recovery of transactions at an undervalue and extortionate credit transactions, and a streamlined exit from administration to dissolution without the need for a subsequent compulsory liquidation. The regime thus continues to be an evolving one, with the States of Guernsey capable of acting to implement relevant changes based on industry experience.
Guernsey's efficient procedural requirements at the application stage are no more demanding than routine applications for compulsory liquidation and there is no requirement for expensive independent reports that have served to hamper the uptake of administration in other jurisdictions.
The process is accordingly an accessible one, with effective gatekeeping parameters, and the Guernsey experience may offer some practical insights for the operation of Jersey's new regime.
Conclusion
The Jersey administration regime positions Jersey alongside other leading restructuring jurisdictions that offer corporate rescue procedures.
From a cross-border perspective, the introduction of administration in Jersey is also a welcome development for the Channel Islands as a whole. Practitioners advising on structures that touch upon either Jersey or Guernsey will now have access to complementary corporate rescue procedures that reflect the jurisdictions' shared principles in relation to corporate insolvency.
Notes
1. It is also open to the English High Court or Court of Session in Scotland to place an insolvent Jersey company directly into UK administration under Schedule B1 of the UK's Insolvency Act 1986 if the Jersey company's centre of main interests is in England or Scotland, as applicable.
2. If a Jersey administration is commenced and there are assets in England or Scotland, then this may lead to applications being made to the relevant foreign court for the recognition of the Jersey administrators.
