Cross-border insolvency – assistance to overseas trustee in bankruptcy – examination of witnesses – modified universalism – extent of customary law – previous precedent – other methods of assistance
An English trustee in bankruptcy, her office and her rights to collect assets in the bankruptcy having been recognised by court order in Guernsey, sought an order recognising her right to examine persons involved in or connected with the bankrupt’s affairs, including persons involved in the management of two Guernsey companies said to be connected to the bankrupt.
There was power to seek such an order under section 426 of the Insolvency Act 1986 as applied to Guernsey by the Insolvency Act 1986 (Guernsey) Order 1989 and possibly also by section 122 of the Bankruptcy Act 1914. However, those powers had not been invoked because of the complication and delay of transferring proceedings to the English High Court and because of concerns that the bankrupt would be tipped off and might take steps to move assets.
On analysing the Privy Council’s decision in Singularis Holdings Ltd v PriceWaterhouseCoopers [2015] 2 WLR 971, the Guernsey court held that the fact that the home court (England) did have an equivalent power in the domestic field to that sought to be confirmed in Guernsey, whereas in Singularis the home court (Cayman) did not, was not determinative.
The question in this case was whether there was such a power. On the basis that in previous Guernsey cases such power was said to have been ruled out and that there was an alternative route to the same result, namely section 426 (and possibly under the Bankruptcy Act 1914), the court declined to make the order sought. The need to resort to customary or common law is one of last resort. Frequently there are other cross-border provisions, in statute or treaty, which can and, as a matter of prudence, would be relied upon first.
It is, however, questionable whether the Guernsey precedent was as strong in its effect as the Judge suggested. Further, the section 426 route only applies in certain territorial cases. It thus remains to be seen what would happen in Guernsey on a similar case where assistance is not available under the Insolvency Act 1986.
Where there is no such power available or where there are practical reasons for not using it, the common law may come to the fore. The suggestion that the majority decision in Singularis regarding the availability in principle of a common law power to order examination of persons in assistance of an overseas insolvency suggests that this matter may be before the Privy Council again in the not too far distant future.
