insolvency

Who is caught

The instruments indexed here address insolvency, winding-up, administration and dissolution across three distinct settings in Guernsey: general company insolvency, insolvency and intervention for regulated financial services licensees, and a bespoke regime for designated financial guarantee insurers.

• Guernsey companies: The Companies (Guernsey) Law, 2008 applies broadly to companies incorporated or registered in Guernsey, including companies limited by shares or guarantee, unlimited and mixed liability companies, and protected and incorporated cell companies, and includes insolvency, receivership and dissolution provisions within its coverage of the company lifecycle.
• Regulated licensees: The Financial Services Business (Enforcement Powers) Law, 2020 applies its insolvency and intervention regimes to licensees under the supervisory laws, including licensed banks, licensed fiduciaries, controlled investment business licensees, lending/credit/finance licensees, and licensed insurers, insurance managers and insurance intermediaries.
• Designated financial guarantee insurers: The Insurance Business (Financial Guarantee Insurance: Special Provisions) Law, 1996 applies only to a Guernsey company formally designated as a financial guarantee insurer (FGI) by Ordinance; per the summary, the only such designated entity is Peak International Limited under a 1997 Ordinance.

Sources: Financial Services Business (Enforcement Powers) (Bailiwick of Guernsey) Law, 2020 · Companies (Guernsey) Law, 2008 (Consolidated text) · Insurance Business (Financial Guarantee Insurance: Special Provisions) (Guernsey) Law, 1996 (Consolidated text)

Key duties

The continuing obligations in these instruments centre on obtaining Commission consent for insolvency steps involving regulated or designated entities, and on procedural duties in transfer and administration processes. The Companies Law is the general framework for company insolvency, receivership and dissolution, but the summary does not set out its specific insolvency duties in detail.

Regulated licensees

• Intervention regimes: The Enforcement Powers Law sets out dissolution, winding up, administration management order and intervention (injunction) regimes for licensees, including insurers.
• Administration managers: Administration managers appointed under the Law have ongoing duties to report information, submit statements of affairs, and protect customer interests.
• Cooperation: Licensees must deal with the Commission openly and co-operatively and keep it promptly informed of anything that ought reasonably to be disclosed, which continues to apply in a failing-licensee context.

Designated FGIs

• Consent to wind up: An application by anyone other than the Commission to wind up a designated FGI, or to have it declared en desastre, requires the Commission's prior consent, and notice of any third-party winding-up application must be served on the Commission at least seven days before the hearing.
• Shareholder resolution: A shareholder resolution to wind up a designated FGI does not take effect without the Commission's consent, which must be withheld unless adequate provision has been made for interested parties.
• Striking-off: A designated FGI may not be struck off the Register, and no striking-off notice may be issued or published, without the Commission's consent.
• Transfer of business: A designated FGI transferring its financial guarantee insurance business must obtain Court sanction of a scheme, supported by an independent expert's report approved by the Commission and Commission approval of the application.
• Transfer notice: Before a transfer scheme application is determined, notice must be published in La Gazette Officielle and an approved international newspaper on at least two occasions each, with 21 days elapsing since the last publication, and a statement of the scheme terms and a summary of the expert's report must be sent to each policyholder and shareholder unless the Court directs otherwise.

Sources: Financial Services Business (Enforcement Powers) (Bailiwick of Guernsey) Law, 2020 · Companies (Guernsey) Law, 2008 (Consolidated text) · Insurance Business (Financial Guarantee Insurance: Special Provisions) (Guernsey) Law, 1996 (Consolidated text)

Exemptions and carve-outs

The main carve-out concerns the scope of the financial guarantee insurer regime rather than exemptions from insolvency duties as such.

• FGI regime is entity-specific: The 1996 Law only applies once a Guernsey company has been formally designated an FGI by Ordinance; most insurance licensees are unaffected, and the regime largely displaces the ordinary insurance and companies law regimes for a designated entity.

The instruments indexed here do not otherwise set out specific exemptions from the general company or licensee insolvency provisions.

Sources: Insurance Business (Financial Guarantee Insurance: Special Provisions) (Guernsey) Law, 1996 (Consolidated text)

Enforcement and penalties

Enforcement powers relevant to failing regulated entities sit primarily in the Enforcement Powers Law, while the FGI Law addresses certain offences.

• Commission enforcement toolkit: Under the Enforcement Powers Law, the Commission may impose enforcement requirements, suspend or revoke licences, issue prohibition and disqualification orders, and impose discretionary and administrative financial penalties, alongside its administration and intervention powers for failing licensees.
• FGI offences: The FGI Law provides for offences for false statements and addresses the relationship between criminal and civil liability, together with limitation of liability for persons acting under the Law.

The summaries do not state specific financial penalty amounts, so none are given here.

Sources: Financial Services Business (Enforcement Powers) (Bailiwick of Guernsey) Law, 2020 · Insurance Business (Financial Guarantee Insurance: Special Provisions) (Guernsey) Law, 1996 (Consolidated text)