Guernsey Insolvency - new Practice Direction on liquidator appointment costs and procedure19 Aug 2015
On 19 August 2015 the Royal Court of Guernsey issued an important Practice Direction concerning the information which will be required to accompany any future application for the appointment of a liquidator or administrator.
In Practice Direction No. 3 of 2015 the Court has made plain that the following information will be required:
- A curriculum vitae of the proposed appointee (in keeping with existing practice); and
- An estimate of the total fees to be charged by the appointee together with an indication of other expenses to be incurred. This will include an estimate of such costs including, for example, legal fees; or
- A statement that a creditor or group of creditors has agreed to underwrite the fees and expenses without charge to other creditors; or
An explanation, in exceptional circumstances only, as to why it is impossible to estimate all or some of the fees and expenses.
All applications will need to include a description of the nature of the work expected to be undertaken whether in or outside of the Bailiwick of Guernsey.
If a variation of the estimate is necessary (or additional work is required which was not foreseen) the appointee will need to make an application for directions to the Court supported by a statement explaining why.
In addition to this important costs guidance the Practice Direction also makes plain that all future applications for directions in a liquidation or administration shall be made in writing and considered on the papers unless the Court considers otherwise.
This Practice Direction reflects the creditor friendly approach of the insolvency jurisdiction in Guernsey to protect the interests of creditor groups as a whole whilst balancing the commercial interests of practitioners and interested parties. It remains to be seen how this will impact upon future applications especially where, for example, potential liquidators enter into commercially sensitive arrangements for funding in order to pursue, properly, defaulting directors or other culpable parties - disclosure of such arrangements on appointment could impact adversely upon the ability of liquidators to pursue investigations or hamper the recovery for creditors where only limited initial exploratory funding may be available and such information could be used tactically against the appointee by any defendant.
For further information please contact partner Alasdair Davidson.