Limited Liability Partnerships (Insolvent Partnerships) (Jersey) Regulations 1998
Revised Edition
13.475.10
Showing the law as at 1 January 2014
This is a revised edition of the law
Limited Liability Partnerships (Insolvent Partnerships) (Jersey) Regulations 1998
Arrangement
Regulation
1 Part 5 of principal Law modified
2 Schedule setting out modified Part 5 given effect
3 Citation
SCHEDULE 1
MODIFICATIONS OF PART 5 OF THE PRINCIPAL LAW IN ITS APPLICATION TO INSOLVENT LIMITED LIABILITY PARTNERSHIPS
1 Modification inserting Article 20A
2 Modification deleting Article 24
3 Modification amending Article 25
4 Modification inserting Articles 25A to 25G
5 Modification substituting Article 26
6
7 Modification inserting Articles 27A and 27B
8 Modification amending Article 28
9 Modification inserting Articles 28A to 28C
10 Modification amending Article 29
11 Modification amending Article 30
12 Modification substituting Article 31
13 Modification adding Articles 31A to 31Z
SCHEDULE 2
PART 5 OF THE PRINCIPAL LAW AS MODIFIED IN ITS APPLICATION TO INSOLVENT LIMITED LIABILITY PARTNERSHIPS
Supporting Documents
Endnotes
Table of Legislation History
Table of Renumbered Provisions
Table of Endnote References
Limited Liability Partnerships (Insolvent Partnerships) (Jersey) Regulations 1998[1]
THE STATES, in pursuance of Articles 44 and 45 of the Limited Liability Partnerships (Jersey) Law 1997[2], have made the following Regulations –
Commencement [see endnotes]
1 Part 5 of principal Law modified
Part 5 of the principal Law (Dissolution and winding up, etc.) shall have effect in its application to insolvent limited liability partnerships with the modifications specified in Schedule 1.
2 Schedule setting out modified Part 5 given effect
Part 5 of the principal Law, as modified in its application to insolvent limited liability partnerships, is set out in Schedule 2.
3 Citation
These Regulations may be cited as the Limited Liability Partnerships (Insolvent Partnerships) (Jersey) Regulations 1998.
SCHEDULE 1[3]
(Regulation 1)
MODIFICATIONS OF PART 5 OF THE PRINCIPAL LAW IN ITS APPLICATION TO INSOLVENT LIMITED LIABILITY PARTNERSHIPS
1 Modification inserting Article 20A
Before Article 20 of the principal Law there shall be inserted the following Article –
“20A Interpretation of Part 5
In this Part –
“insolvency manager” means, in relation to an insolvent limited liability partnership, the person for the time being appointed under Article 25C, 25E or 25F to be responsible for its insolvent winding up;
“insolvency committee” means, in relation to an insolvent limited liability partnership, the committee appointed under Article 25D.”.
2 Modification deleting Article 24
Article 24 of the principal Law (Continuation of partnership following dissolution) shall be deleted.
3 Modification amending Article 25
In Article 25 of the principal Law (Winding up) –
(a) in paragraph (1) for the words “Subject to paragraph (2) and Article 24” there shall be substituted the words “Subject to paragraph (2) of this Article and to Article 25C(4)”;
(b) in paragraph (2) –
(i) at the beginning there shall be inserted the words “Subject to paragraph (2A),”, and
(ii) sub-paragraph (b) shall be deleted;
(c) after paragraph (2) there shall be inserted the following paragraph –
“(2A) No appointment may be made pursuant to paragraph (2) in respect of an insolvent limited liability partnership after an insolvency manager is first appointed for it.”;
(d) at the beginning of paragraph (3) there shall be inserted the words “Subject to paragraph (3A),”;
(e) after paragraph (3) there shall be inserted the following paragraph –
“(3A) Where the limited liability partnership is insolvent on dissolution or becomes insolvent following dissolution, notwithstanding that a partner continues to be an agent of the partnership, the partner’s ability to bind the partnership shall cease.”;
(f) at the beginning of each of paragraphs (4), (5) and (6) there shall be inserted the words “Subject to paragraph (6A),”;
(g) after paragraph (6) there shall be inserted the following paragraph –
“(6A) Where an insolvent limited liability partnership ceases to have 2 or more partners at any time following its dissolution and following the appointment of an insolvency manager for it, paragraphs (4), (5) and (6) shall apply as if any reference in them to the person responsible for winding up the affairs of the limited liability partnership was a reference to the insolvency manager.”
4 Modification inserting Articles 25A to 25G
After Article 25 of the principal Law there shall be inserted the following Articles –
“25A Partnership insolvent upon or following dissolution
(1) Where a limited liability partnership is insolvent upon dissolution or becomes insolvent following dissolution, the person responsible for winding up its affairs –
(a) shall swear an affidavit recording the person’s opinion that the partnership is insolvent and deliver a copy of the affidavit to the registrar –
(i) where the limited liability partnership is insolvent upon dissolution, within 7 days of the dissolution; or
(ii) where the limited liability partnership becomes insolvent following dissolution, within 7 days of the insolvency;
and
(b) shall –
(i) by not less than 14 days’ notice given by post, call a meeting of the creditors of the limited liability partnership, to be held within Jersey within 28 days after that affidavit is sworn and, in the notice, nominate an insolvency manager;
(ii) when that notice is given to the creditors, deliver a copy of it to the registrar;
(iii) not less than 10 days before the day for which the meeting is called, give notice of the meeting by advertisement in the Jersey Gazette;
(iv) during the period before the creditors’ meeting is held, furnish any creditor free of charge with such information concerning the affairs of the limited liability partnership as the person may reasonably request; and
(v) make out a statement as to the affairs of the limited liability partnership, verified by affidavit, and lay that statement before the creditors’ meeting.
(2) If the person responsible for winding up the affairs of the limited liability partnership is qualified for appointment as its insolvency manager, the person may nominate himself or herself under paragraph (1)(b)(i).
(3) The person responsible for winding up the affairs of the limited liability partnership shall preside at the creditors’ meeting.
(4) The insolvent winding up of a limited liability partnership commences –
(a) where the partnership is insolvent upon dissolution, on the day of dissolution; and
(b) where the partnership becomes insolvent following dissolution, on the day on which the creditors’ meeting is held.
(5) If default is made in compliance with this Article, the person responsible for winding up the affairs of the limited liability partnership is guilty of an offence and liable to a fine.
25B Procedure and quorum at creditors’ meeting
(1) Subject to paragraphs (2), (3) and (4), every creditor who has been given notice of a creditors’ meeting shall be entitled to vote at the meeting or any adjournment of it.
(2) Votes shall be calculated according to the amount of the creditor’s debt on the day the insolvent winding up commences.
(3) A creditor shall not vote in respect of a debt for an unliquidated amount, or any debt whose value is not ascertained, except where the person responsible for winding up the affairs of the limited liability partnership agrees to put upon the debt an estimated minimum value for the purpose of entitlement to vote.
(4) For any resolution to pass at the creditors’ meeting there must be a majority in excess of one half in value of the creditors present in person or by proxy and voting on the resolution.
(5) A creditors’ meeting shall not be competent to act unless there are present in person or by proxy at least 3 creditors, or all of the creditors, if their number does not exceed 3, being in either case entitled to vote.
25C Appointment of insolvency manager
(1) The creditors at a creditors’ meeting may nominate an insolvency manager.
(2) The person nominated by the creditors to be insolvency manager or, if none, the person nominated by the person responsible for winding up the affairs of the limited liability partnership, is appointed with effect from the conclusion of the creditors’ meeting.
(3) In the case of different persons being nominated, a creditor or partner of the limited liability partnership or the person responsible for winding up its affairs may, within 7 days after the day on which the nomination was made by the creditors, apply to the Court for an order either –
(a) directing that the person nominated by the person responsible for winding up the affairs of the limited liability partnership shall be the insolvency manager instead of or jointly with the person nominated by the creditors; or
(b) appointing some other person to be the insolvency manager.
(4) Upon the appointment of the insolvency manager –
(a) all the powers and duties of the person responsible for winding up the affairs of the limited liability partnership shall cease;
(b) any limited liability partnership property and any beneficial interest of the limited liability partnership in any limited liability partnership property vested in the person responsible for winding up the affairs of the limited liability partnership pursuant to Article 25(4)(b) shall vest in the insolvency manager; and
(c) any proceedings which might have been continued or commenced against the person responsible for winding up the affairs of the limited liability partnership pursuant to Article 25(4)(c) may be continued or commenced against the insolvency manager in the person’s capacity as such.
(5) Where the name of the person responsible for winding up the affairs of the limited liability partnership is inscribed in the Public Registry of Contracts as the holder of or having an interest in immovable property which vests in the insolvency manager by virtue of paragraph (4)(b), the insolvency manager shall deliver to the Judicial Greffier notice of the name of the insolvency manager, in whom the property has vested, within 28 days after the property so vests.
(6) Any judgment obtained against the insolvency manager in the manager’s capacity as such in any proceedings continued or commenced in accordance with paragraph (4)(c) shall only be enforceable against the limited liability partnership property.
(7) The insolvency manager shall, within 14 days of the manager’s appointment, deliver notice thereof to the registrar and to the creditors.
(8) If default is made in compliance with paragraph (5) or (7), the insolvency manager is guilty of an offence and liable to a fine not exceeding level 4 on the standard scale and, in the case of a continuing offence, to a further fine not exceeding level 2 on the standard scale for each day on which the offence so continues.
25D Appointment of insolvency committee
(1) A creditors’ meeting may appoint an insolvency committee consisting of not more than 5 persons to exercise the functions conferred on it by this Part.
(2) If a committee is appointed, the partners of the limited liability partnership may appoint such number of persons not exceeding 5 as they think fit to act as members of the committee.
(3) The creditors may resolve that all or any of the persons so appointed by the partners ought not to be members of the committee and, if the creditors so resolve –
(a) the persons mentioned in the resolution are not then, unless the Court otherwise directs, qualified to act as members of the committee; and
(b) on an application to the Court under this provision, the Court may appoint other persons to act as such members in place of the persons mentioned in the resolution.
25E Remuneration of and vacancy in office of insolvency manager
(1) An insolvency manager is entitled to receive such remuneration as is agreed between the insolvency manager and the insolvency committee or, if there is no committee, between the insolvency manager and the creditors or, failing any such agreement, as is fixed by the Court.
(2) The creditors may at any time remove the insolvency manager (other than such a person appointed by the Court).
(3) If a vacancy occurs, by death, resignation or otherwise, in the office of the insolvency manager (other than such a person appointed by the Court) the creditors may appoint another insolvency manager.
(4) Where a vacancy in the office of insolvency manager is filled, either by appointment of the creditors or of the Court, Article 25C(4), (5), (6), (7) and (8) shall apply for the purposes of notification of the appointment to the registrar and the vesting of such property in, the continuation and commencement of such proceedings against and the payment of any amount to the new insolvency manager as was formerly vested in or might have been continued or commenced against or paid to the previous insolvency manager in the manager’s capacity as such, as if any reference in them to the person responsible for winding up the affairs of the limited liability partnership were a reference to the previous insolvency manager and any reference to the insolvency manager were a reference to the new insolvency manager.
25F Appointment or removal by the Court of insolvency manager
(1) If for any reason there is, in an insolvent winding up, no insolvency manager, the Court may appoint such a person.
(2) The Court may, on reason being given, remove an insolvency manager and appoint another.
25G No insolvency manager appointed
(1) This Article applies where an insolvent winding up has commenced but no insolvency manager has been appointed.
(2) During the period before the appointment of an insolvency manager, the powers of the person responsible for winding up the affairs of the limited liability partnership shall not be exercised except –
(a) with the sanction of the Court;
(b) to secure compliance with Article 25A; or
(c) to protect the limited liability partnership property.
(3) If the person responsible for winding up the affairs of the limited liability partnership contravenes paragraph (2) the person shall be guilty of an offence and liable to a fine or up to 6 months’ imprisonment or both.”.
5 Modification substituting Article 26
For Article 26 of the principal Law (Power of Court to give directions as to winding up) there shall be substituted the following Article –
“26 Reference of questions and powers to the Court
(1) The insolvency manager, a partner in the partnership or a creditor of the partnership may apply to the Court for the Court to determine a question arising in an insolvent winding up, or exercise all or any of the powers which the Court or the Viscount might exercise if a declaration had been made in relation to the limited liability partnership under the Bankruptcy (Désastre) (Jersey) Law 1990[4].
(2) The Court, if satisfied that the determination of the question or the required exercise of power will be just and beneficial, may accede wholly or partially to the application on such terms and conditions as it thinks fit or may make such other order on the application as it thinks just.
(3) An Act of the Court recording the making of an order under this Article staying the proceedings in the winding up shall, within 14 days after the making of the order, be delivered by the insolvency manager, or otherwise as may be ordered by the Court, to the registrar, who shall register it.
(4) If default is made in compliance with paragraph (3), the insolvency manager or other person ordered by the Court to deliver the Act is guilty of an offence and liable to a fine not exceeding level 4 on the standard scale and, in the case of a continuing offence, to a further fine not exceeding level 2 on the standard scale for each day on which the offence so continues.”.
6
7 Modification inserting Articles 27A and 27B
After Article 27 of the principal Law there shall be inserted the following Articles –
“27A Application of the law relating to désastre
(1) Subject to paragraph (2), in an insolvent winding up, the same rules prevail with regard to the respective rights of secured and unsecured creditors, to debts provable, to the time and manner of proving debts, to the admission and rejection of proof of debts, to the setting off of debts and, subject to the provision in Article 28(1) for the subordination of liabilities to partners and former partners to liabilities to other creditors, to the order of payment of debts as are in force for the time being with respect to persons against whom a declaration has been made under the Bankruptcy (Désastre) (Jersey) Law 1990 with the substitution of references to the insolvency manager and to the commencement of the insolvent winding up respectively for references to the Viscount and to the date of the declaration.
(2) Any surplus remaining after payment of the debts proved in the insolvent winding up, before being applied for any other purpose, shall be applied in paying interest on those debts which bore interest prior to the commencement of the insolvent winding up in respect of the period during which they have been outstanding since the commencement of the insolvent winding up and at the rate of interest applicable apart from the winding up.
27B Arrangement when binding on creditors
(1) An arrangement entered into between a limited liability partnership immediately preceding the commencement of an insolvent winding up and its creditors or, in the course of an insolvent winding up, between the insolvency manager and the creditors is (subject to the right of appeal under paragraph (2)) binding –
(a) on the limited liability partnership; and
(b) on the creditors, if acceded to by three-quarters in number and value of them.
(2) A creditor may, within 3 weeks from the completion of the arrangement, appeal to the Court against it; and the Court may thereupon, as it thinks just, amend, vary or confirm the arrangement.”.
8 Modification amending Article 28
In Article 28 of the principal Law (Settling accounts on winding up) –
(a) in paragraph (1), at the beginning of sub-paragraph (a) there shall be inserted the words “subject to the provisions of any enactment as to preferential payments,”; and
(b) after paragraph (2) there shall be added the following paragraph –
“(3) All costs, charges and expenses properly incurred in the winding up of an insolvent limited liability partnership, including the remuneration of the insolvency manager, are payable out of the limited liability partnership property in accordance with Article 27A(1) and paragraph (1) of this Article.”.
9 Modification inserting Articles 28A to 28C
After Article 28 of the principal Law there shall be inserted the following Articles –
“28A Meetings of insolvent limited liability partnership and creditors
(1) If an insolvent winding up continues for more than 12 months, the insolvency manager shall call a meeting of the partners in the limited liability partnership and a meeting of the creditors, to be held on the first convenient date within 3 months after the end of the first 12 months from the commencement of the insolvent winding up, and of each succeeding 12 months or such longer period as the Commission may allow, and shall lay before the meetings an account of the insolvency manager’s acts and dealings and of the conduct of the winding up during the preceding 12 months.
(2) If default is made in compliance with paragraph (1), the insolvency manager is guilty of an offence and liable to a fine not exceeding level 2 on the standard scale.
28B Insolvency manager’s report on completion of winding up
(1) As soon as the affairs of an insolvent limited liability partnership are fully wound up, the insolvency manager shall make up an account of the winding up, showing how it has been conducted and how the limited liability partnership property has been disposed of, and thereupon shall call a meeting of the partners in the limited liability partnership and a meeting of its creditors for the purpose of laying the account before the meetings and giving an explanation of it.
(2) Each such meeting shall be called by not less than 21 days’ notice sent by post, accompanied by a copy of the insolvency manager’s account.”
10 Modification amending Article 29
In Article 29 of the principal Law (Completion of winding up) –
(a) for paragraph (1) there shall be substituted the following paragraphs –
“(1) Within 7 days after the date of the meetings described in Article 28B (or, if they are not held on the same day, after the date of the later one) the insolvency manager shall deliver to the registrar –
(a) subject to paragraphs (1A) and (1B), a statement signed by the insolvency manager of the holding of the meetings and their dates; and
(b) a copy of the manager’s account.
(1A) If a quorum is not present at the creditors’ meeting, the insolvency manager shall, in lieu of the statement required by paragraph (1)(a), deliver a statement that the meeting was duly called and that no quorum was present.
(1B) If all the partners, or so many of the partners as the partnership agreement requires, are not present at the partners’ meeting, the insolvency manager shall, in lieu of the statement required by paragraph (1)(a), deliver a statement that the meeting was duly called but not held.”;
(b) in paragraph (2) for the words “the person responsible for winding up the affairs of the limited liability partnership” there shall be substituted the words “the insolvency manager”.
11 Modification amending Article 30
In Article 30 of the principal Law (Effect of declaration that a partnership is en désastre), after paragraph (1) there shall be inserted the following paragraph –
“(1A) For the purposes of Article 28(1) and (2), an insolvent limited liability partnership in respect of which there is a désastre shall be deemed to be subject to a winding up of its affairs.”.
12 Modification substituting Article 31
For Article 31 of the principal Law there shall be substituted the following Article –
“31 Cancellation of registration following insolvent winding up etc.
(1) Upon receipt of –
(a) a statement delivered to the registrar under Article 29; or
(b) notification under Article 36(3) of the Bankruptcy (Désastre) (Jersey) Law 1990,
in respect of an insolvent limited liability partnership, the registrar shall forthwith register the statement or notification.
(2) Subject to paragraph (3), at the end of 3 months from the registration of the statement or notification, the registrar shall cancel the entry in the register relating to the limited liability partnership and issue a certificate of cancellation to the insolvency manager or Viscount as the case may require.
(3) The Court may, on the application of the insolvency manager or Viscount, as the case may require, or of another person who appears to the Court to be interested, make an order deferring the date on which a certificate of cancellation of registration is issued to such date as the Court thinks fit.
(4) The person on whose application an order of the Court under paragraph (3) is made shall, within 14 days after the making of the order, deliver to the registrar the relevant Act of the Court for registration.
(5) If default is made in compliance with paragraph (4), the person on whose application the order is made shall be guilty of an offence and liable to a fine not exceeding level 4 on the standard scale and, in the case of a continuing offence, to a further fine not exceeding level 2 on the standard scale for each day on which the offence so continues.
(6) A certificate issued under paragraph (2) is conclusive evidence as to the cancellation of the registration of the limited liability partnership.”.
13 Modification adding Articles 31A to 31Z
After Article 31 of the principal Law there shall be added the following Articles –
“31A Powers and duties of insolvency manager
(1) An insolvency manager may, with the sanction of the Court or the insolvency committee (or, if there is no such committee, a meeting of the creditors) –
(a) pay a class of creditors in full;
(b) compromise any claim by or against the limited liability partnership.
(2) An insolvency manager may, without sanction, do anything, other than an act within paragraph (1), that may be required for the beneficial winding up of the limited liability partnership.
(3) An insolvency manager may summon a meeting of the partners of the limited liability partnership for the purpose of obtaining their sanction for any other purpose the insolvency manager may think fit.
(4) The insolvency manager shall pay the debts of the limited liability partnership in accordance with this Part.
(5) The appointment or nomination of more than one insolvency manager shall declare whether any act to be done is to be done by all or any one or more of them and, in default, any such act may be done by 2 or more of them.
31B Power to disclaim onerous property
(1) Subject to this Article, the insolvency manager may, within 6 months after the commencement of the insolvent winding up, by the giving of notice signed by the insolvency manager and referring to this Article and Article 31C to each person who is interested in or under any liability in respect of the property disclaimed, disclaim any onerous movable property, or any onerous immovable property situated outside Jersey, and may do so notwithstanding that the insolvency manager has taken possession of it, endeavoured to sell it or otherwise exercised rights of ownership in relation to it.
(2) For the purposes of this Article –
(a) onerous movable property is any –
(i) unprofitable contract; and
(ii) other movable property of the limited liability partnership which is unsaleable or not readily saleable or is such that it may give rise to a liability to pay money or perform any other onerous act;
(b) onerous immovable property is any immovable property of the limited liability partnership situated outside Jersey and having the characteristics mentioned in sub-paragraph (a)(ii).
(3) A disclaimer under this Article –
(a) shall operate so as to determine, as from the date of the disclaimer, the rights, interests and liabilities of the limited liability partnership in or in respect of the property disclaimed; but
(b) shall not, except so far as is necessary for the purpose of releasing the limited liability partnership from liability, affect the rights or liabilities of any other person.
(4) A person sustaining loss or damage in consequence of the operation of a disclaimer under this Article shall be deemed to be a creditor of the limited liability partnership to the extent of the loss or damage in the winding up.
31C Power of Court in respect of disclaimed property
(1) This Article applies where the insolvency manager has disclaimed property under Article 31B.
(2) An application may be made to the Court under this Article by –
(a) a person who claims an interest in the disclaimed property; or
(b) a person who is under a liability in respect of the disclaimed property, not being a liability discharged by the disclaimer.
(3) Subject to paragraph (4), the Court may, on an application under this Article, make an order on such terms as it thinks fit for the vesting of the disclaimed property in, or for its delivery to –
(a) a person entitled to it or a trustee for such a person; or
(b) a person subject to a liability mentioned in paragraph (2)(b) or a trustee for such a person.
(4) The Court shall not make an order by virtue of paragraph (3)(b) except where it appears to the Court that it would be just to do so for the purpose of compensating the person subject to the liability in respect of the disclaimer.
(5) The effect of an order under this Article shall be taken into account in assessing for the purpose of Article 31B(4) the extent of loss or damage sustained by a person in consequence of the disclaimer.
31D Unenforceability of liens on records
(1) Subject to paragraph (2), in an insolvent winding up, a lien or other right to retain possession of any records of a limited liability partnership shall be unenforceable to the extent that its enforcement would deny possession of those records to the insolvency manager.
(2) Paragraph (1) does not apply to a lien on documents which give a title to property and are held as such.
31E Transactions at an undervalue and preferences
(1) Subject to this Article, where an insolvent limited liability partnership has at a relevant time –
(a) entered into a transaction with any person at an undervalue; or
(b) given a preference to any person,
the insolvency manager may apply to the Court for such order as the Court thinks fit for restoring the position to what it would have been if the limited liability partnership had not entered into that transaction or given that preference, as the case may be.
(2) For the purposes of this Article, a limited liability partnership enters into a transaction with a person at an undervalue if the limited liability partnership –
(a) makes a gift to that person or otherwise enters into a transaction with that person on terms for which there is no cause; or
(b) enters into a transaction with that person for a cause the value of which, in money or money’s worth, is significantly less than the value, in money or money’s worth, of the cause provided by the limited liability partnership.
(3) For the purposes of this Article, a limited liability partnership gives a preference to a person if –
(a) that person is one of the creditors of the limited liability partnership or a surety or guarantor for any of the debts or other liabilities of the limited liability partnership; and
(b) the limited liability partnership –
(i) does anything; or
(ii) suffers anything to be done,
which has the effect of putting that person into a position which, in the event of the insolvent winding up of the limited liability partnership, will be better than the position the person would have been in if that thing had not been done.
(4) The Court shall not make an order under this Article in respect of a preference given to any person unless the limited liability partnership which gave it was influenced in deciding to give it by a desire to produce in relation to that person the effect referred to in paragraph (3)(b).
(5) Subject to paragraph (6), the time at which a limited liability partnership enters into a transaction at an undervalue or gives a preference is a relevant time if the transaction is entered into or the preference given –
(a) in the case of a transaction at an undervalue, at a time in the period of 5 years ending with the date of commencement of the insolvent winding up;
(b) in the case of a preference which is not a transaction at an undervalue, at a time in the period of one year ending with that date.
(6) Subject to paragraph (7), where a limited liability partnership enters into a transaction at an undervalue or gives a preference at a time mentioned in paragraph (5)(a) or (b), that time is not a relevant time unless the limited liability partnership –
(a) is at that time unable to pay its debts as they fall due; or
(b) becomes unable to pay its debts as they fall due in consequence of the transaction or preference.
(7) Paragraph (6) shall not apply to a transaction at an undervalue which takes place less than 2 years before the date of commencement of the insolvent winding up.
(8) In this Article, “cause” has the meaning assigned to it by the customary law of Jersey.
31F Responsibility of persons for wrongful trading
(1) Notwithstanding Article 5 but subject to paragraph (4), if, in the course of an insolvent winding up, it appears that paragraph (2) applies in relation to a person who is or has been a partner of the limited liability partnership, the Court, on the application of the insolvency manager, may, if it thinks it proper to do so, order that that person be personally responsible, without any limitation of liability, for all or any of the debts or other liabilities of the limited liability partnership arising after the time referred to in paragraph (2).
(2) This paragraph applies in relation to a person if –
(a) at some time before the date of commencement of the insolvent winding up that person –
(i) knew that there was no reasonable prospect that the limited liability partnership would avoid insolvency; or
(ii) on the facts known to the person was reckless as to whether the limited liability partnership would avoid insolvency; and
(b) that person was a partner in the limited liability partnership at that time.
(3) For the purposes of paragraph (2), a person shall not be treated as having had knowledge of any matter by reason only that another partner in the limited liability partnership had such knowledge.
(4) The Court shall not make an order under paragraph (1) with respect to any person if it is satisfied that after either condition specified in paragraph (2)(a) was first satisfied in relation to the person that person took reasonable steps with a view to minimizing the potential loss to creditors of the limited liability partnership.
(5) On the hearing of an application under this Article, the insolvency manager may give evidence or call witnesses.
(6) For the purposes of the conditions specified in paragraph (2)(a) of this Article, a limited liability partnership is insolvent if, within the meaning of Article 5(5), it is unable to pay its debts and, for the purpose of determining whether a limited liability partnership is so unable to pay its debts, paragraph (6) of that Article shall also apply as if the reference in it to the person denying liability under paragraph (3) or (4) of that Article were a reference to the person denying responsibility under this Article.
31G Responsibility for fraudulent trading
(1) If, in the course of an insolvent winding up, it appears that any business of the limited liability partnership has been carried on with intent to defraud creditors of the limited liability partnership or creditors of another person, or for a fraudulent purpose, the Court may, on the application of the insolvency manager, order that persons who were knowingly parties to the carrying on of the business in that manner are to be liable to make such contributions to the limited liability partnership property as the Court thinks proper.
(2) For the purposes of paragraph (1) a partner in a limited liability partnership shall not be treated as having been knowingly a party to the carrying on of the business in the manner described in that paragraph by reason only that another partner in the limited liability partnership was knowingly such a party.
(3) On the hearing of an application under this Article the insolvency manager may give evidence or call witnesses.
(4) Where the Court makes an order under this Article or Article 31F, it may give such further directions as it thinks proper for giving effect to the order.
(5) Where the Court makes an order under this Article or Article 31F in relation to a person who is a creditor of the limited liability partnership, it may direct that the whole or part of a debt owed by the limited liability partnership to that person and any interest thereon shall rank in priority after all other debts owed by the limited liability partnership and after any interest on those debts.
(6) This Article and Article 31F have effect notwithstanding that the person concerned may be criminally liable in respect of matters on the ground of which the order under paragraph (1) is to be made.
31H Extortionate credit transactions
(1) This Article applies in an insolvent winding up where the limited liability partnership is, or has been, a party to a transaction for, or involving, the provision of credit to the limited liability partnership.
(2) The Court may, on the application of the insolvency manager, make an order with respect to the transaction if the transaction is or was extortionate and was entered into in the period of 3 years ending with the commencement of the insolvent winding up.
(3) For the purposes of this Article, a transaction is extortionate if, having regard to the risk accepted by the person providing the credit –
(a) the terms of it are or were such as to require grossly exorbitant payments to be made (whether unconditionally or in certain contingencies) in respect of the provision of the credit; or
(b) it otherwise grossly contravened ordinary principles of fair dealing,
and it shall be presumed, unless the contrary is proved, that a transaction with respect to which an application is made under this Article is, or as the case may be, was extortionate.
(4) An order under this Article with respect to a transaction may contain one or more of the following as the Court thinks fit –
(a) provision setting aside the whole or part of an obligation created by the transaction;
(b) provision otherwise varying the terms of the transaction or varying the terms on which a security for the purposes of the transaction is held;
(c) provision requiring a person who is or was a party to the transaction to pay to the insolvency manager sums paid to that person, by virtue of the transaction, by the limited liability partnership;
(d) provision requiring a person to surrender to the insolvency manager property held by the person as security for the purposes of the transaction;
(e) provision directing accounts to be taken between any persons.
31J Application of provisions to insolvent limited liability partnership en désastre
Articles 31F, 31G and 31H shall apply to an insolvent limited liability partnership in respect of which a désastre is declared under the Bankruptcy (Désastre) (Jersey) Law 1990 as if –
(a) any reference to an insolvent winding up was a reference to a désastre; and
(b) any reference to the insolvency manager was a reference to the Viscount.
31K Delivery and seizure of property
(1) Where a person has in the person’s possession or control property or records to which a limited liability partnership appears in an insolvent winding up to be entitled, the Court may require that person forthwith (or within a period which the Court may direct) to pay, deliver, convey, surrender or transfer the property or records to the insolvency manager.
(2) Where –
(a) the insolvency manager seizes or disposes of property which is not property of the limited liability partnership; and
(b) at the time of seizure or disposal the insolvency manager believes, and has reasonable grounds for believing, that the insolvency manager is entitled (whether in pursuance of an order of the Court or otherwise) to seize or dispose of that property,
the insolvency manager shall not be liable to any person in respect of loss or damage resulting from the seizure or disposal except in so far as that loss or damage is caused by the negligence of the insolvency manager, and shall have a lien on the property, or the proceeds of its sale, for expenses incurred in connection with the seizure or disposal.
31L Duty to co-operate with insolvency manager
(1) In an insolvent winding up, each of the persons mentioned in paragraph (2) shall –
(a) give the insolvency manager information concerning the limited liability partnership and its establishment, business, dealings, affairs, or property which the insolvency manager may at any time after the commencement of the insolvent winding up reasonably require; and
(b) attend on the insolvency manager at reasonable times and on reasonable notice when requested to do so.
(2) The persons referred to in paragraph (1) are –
(a) those who are, or have at any time been, partners in the limited liability partnership;
(b) those who are in the employment of the limited liability partnership, or have been in its employment within one year before the commencement of the insolvent winding up, and are in the opinion of the insolvency manager capable of giving information which the person requires; and
(c) those who are, or have within that year been, partners in or in the employment of another partnership which is or was a partner in the limited liability partnership in question or officers of, or in the employment of any person who is or was a partner in the limited liability partnership in question.
(3) For the purposes of paragraph (2), “employment” includes employment under a contract for services (contrat de louage d’ouvrage).
(4) Default in compliance with any obligation imposed by this Article is an offence liable to a fine or up to 6 months’ imprisonment or to both.
31M Insolvency manager to report criminal offences
(1) If it appears to the insolvency manager that any person has been guilty of an offence in relation to the limited liability partnership for which that person is criminally liable, the insolvency manager shall –
(a) forthwith report the matter to the Attorney General; and
(b) furnish the Attorney General with information and give the Attorney General access to, and facilities for inspecting and taking copies of, documents (being information or documents in the possession of or under the control of the insolvency manager and relating to the matter in question) as the Attorney General requires.
(2) Where a report is made to the Attorney General under paragraph (1), the Attorney General may refer the matter to the Minister or the Commission for further enquiry; and the Minister or the Commission, as the case may be –
(a) shall thereupon investigate the matter; and
(b) may also, if they think it necessary for the purposes of their investigation, investigate the affairs of any partner in the limited liability partnership or of any company of which the limited liability partnership is a member and controls the composition of the board of directors or of which the limited liability partnership holds more than half in nominal value of the equity share capital, or of any director or employee of such a company; and shall report upon the affairs of the partner, company, director or employee so far as they think that the results of their investigation of that person’s affairs are relevant to the investigation of the affairs of the limited liability partnership.
(3) The Minister or the Commission may appoint one or more inspectors to carry out an investigation and report to he or she for the purposes of paragraph (2).
(4) If it appears to the Court in the course of an insolvent winding up that any person has been guilty as mentioned in paragraph (1), and that no report with respect to the matter has been made by the insolvency manager to the Attorney General under that paragraph, the Court may (on the application of a person interested in the insolvent winding up or of its own motion) direct the insolvency manager to make such a report; and on a report being made accordingly this Article shall have effect as though the report had been made in pursuance of paragraph (1).
31N Obligations and powers arising under Article 31M
(1) If the Minister, the Commission or an inspector appointed by either of them to carry out an investigation considers that any person is or may be in possession of information relating to a matter which they believe to be relevant to an investigation pursuant to Article 31M(2), the Minister, the Commission or inspector may require the person –
(a) to produce and make available to them all records in the person’s custody or power relating to that matter;
(b) at reasonable times and on reasonable notice, to attend before them; and
(c) otherwise to give them all assistance in connection with the investigation which the person is reasonably able to give,
and it is that person’s duty to comply with the requirement.
(2) The Minister, the Commission or an inspector appointed by either of them to carry out an investigation may, for the purposes of the examination, examine on oath any such person as is mentioned in paragraph (1), and may administer an oath accordingly.
(3) An answer given by a person to a question put to the person in exercise of the powers conferred by paragraph (1) may not be used by the prosecution in evidence against the person in any criminal proceedings except for the purposes of proceedings under Article 31Q(7).
(4) Where the Minister, the Commission or an inspector appointed by either of them to carry out an investigation has reasonable grounds for believing that any partner or former partner in or director or past director of the person whose affairs are being investigated maintains or has maintained a bank account of any description, whether alone or jointly with another person and whether in Jersey or elsewhere, into or out of which there has been paid money which has been in any way connected with an act or omission, or series of acts or omissions, which constitutes misconduct (whether fraudulent or not) on the part of that partner or former partner or director or past director towards the person or its remaining partners or its members, as the case may be, the Minister, the Commission or the inspector may require the partner or former partner or director or past director to produce and make available to the Minister, the Commission or inspector, as the case may be, all records in the partner’s or former partner’s or director’s or former director’s possession or under their control relating to that bank account.
(5) Where criminal proceedings are instituted by the Attorney General following a report or reference under Article 31M the insolvency manager and every partner, agent and employee of the limited liability partnership past and present (other than the defendant) shall give the Attorney General any assistance in connection with the prosecution which they are reasonably able to give; and for the purpose “agent” includes a banker, advocate or solicitor of the limited liability partnership and a person employed by the limited liability partnership as auditor.
(6) If a person fails or neglects to give assistance as required by paragraph (5), the Court may, on the application of the Attorney General, direct the person to comply with that paragraph; and if the application is made with respect to an insolvency manager, the Court may (unless it appears that the failure or neglect to comply was due to the insolvency manager not having in his or her hands sufficient assets of the limited liability partnership to enable him or her to do so) direct that the costs shall be borne by the insolvency manager personally.
(7) A person who knowingly or recklessly makes to the Minister, the Commission or an inspector appointed by either of them any statement, whether written or oral, which conveys, or purports to convey, any information or explanation which the Minister, the Commission or inspector requires, or is entitled to require, in the course of an investigation and is misleading, false or deceptive in a material particular, is guilty of an offence and liable to a fine or to imprisonment for a term not exceeding 2 years, or to both.
31P Authority for search
(1) An inspector appointed under Article 31M(3) may for the purpose of the investigation apply to the Bailiff for a warrant under this Article in relation to specified premises.
(2) If the Bailiff is satisfied that the conditions in paragraph (3) are fulfilled the Bailiff may issue a warrant authorizing a police officer and any other person named in the warrant to enter the specified premises (using such force as is reasonably necessary for the purpose) and to search them.
(3) The conditions referred to in paragraph (2) are –
(a) that there are reasonable grounds for suspecting that there is on the premises material (whether or not it can be particularised) which is likely to be of substantial value (whether by itself or together with other material) to the investigation for the purpose of which the application is made; and
(b) that the investigation for the purposes of which the application is made might be seriously prejudiced unless immediate entry can be secured to the premises.
(4) Where a person has entered premises in the execution of a warrant issued under this Article, the person may seize and retain any material, other than items subject to legal professional privilege, which is likely to be of substantial value (whether by itself or together with other material) to the investigation for the purpose of which the warrant was issued.
(5) In this Article, “premises” includes any place and, in particular, includes –
(a) any vehicle, vessel, aircraft or hovercraft;
(b) any offshore installation; and
(c) any tent or movable structure.
(6) Any person who wilfully obstructs any person acting in the execution of a warrant issued under this Article is guilty of an offence and liable to a fine or up to 2 years’ imprisonment or both.
31Q Failure to co-operate with Minister, Commission or inspector
(1) If any person –
(a) fails to comply with a requirement under Article 31N; or
(b) refuses to answer any question put to the person by the inspectors for the purpose of the investigation,
the Minister, the Commission or the inspector may certify the refusal in writing to the Court.
(2) The Court may thereupon inquire into the case and, after hearing any witness who may be produced against or on behalf of the alleged offender and any statement in defence, the Court may punish the offender as if the offender had been guilty of contempt of the Court.
31R Inspector’s report to be evidence
(1) A copy of a report of an inspector certified by whichever of the Minister or the Commission appointed the inspector to be a true copy, is admissible in legal proceedings as evidence of the opinion of the inspector in relation to a matter contained in the report.
(2) A document purporting to be a certificate mentioned in paragraph (1) shall be received in evidence and be deemed to be such a certificate unless the contrary is proved.
31S Privileged information
Nothing in this Part requires the disclosure or production to the Minister or the Commission or to an inspector appointed by either of them –
(a) by a person of information or records which the person would in an action in the court be entitled to refuse to disclose or produce on the grounds of legal professional privilege in proceedings in the court except, if the person is a lawyer, the name and address of the person’s client;
(b) by a limited liability partnership’s bankers (as such) of information or records relating to the affairs of any of their customers other than the limited liability partnership or other person under investigation.
31T Enforcement of duty of partner or insolvency manager to make returns etc.
(1) If, in an insolvent winding up, a partner or the insolvency manager who has defaulted in delivering a document or in giving any notice which the partner or insolvency manager is by law required to deliver or give, fails to make good the default within 14 days after the service on the partner or insolvency manager of a notice requiring the partner or insolvency manager to do so, the Court has the following powers.
(2) On an application made by a creditor or by the registrar, the Court may make an order directing the partner or the insolvency manager to make good the default within the time specified in the order.
(3) The Court’s order may provide that costs of and incidental to the application shall be borne, in whole or in part, by the partner or the insolvency manager personally.
(4) Nothing in paragraph (1) prejudices the operation of any enactment imposing penalties on a partner or an insolvency manager in respect of a default mentioned therein.
31U Qualifications of insolvency manager
(1) A person who is not an individual is not qualified to act as an insolvency manager.
(2) A person is not qualified to be appointed as an insolvency manager unless the person is a member of –
(a) the Institute of Chartered Accountants in England and Wales;
(b) the Institute of Chartered Accountants of Scotland;
(c) the Association of Chartered Certified Accountants; or
(d) the Institute of Chartered Accountants in Ireland.
(3) None of the following persons is so qualified –
(a) a partner in or employee of the limited liability partnership;
(b) any partner in a partnership which is itself a partner in the limited liability partnership;
(c) any officer or employee of a company which is a partner in the limited liability partnership; or
(d) where a partner in the limited liability partnership is also a partner in another partnership, any partner in that partnership.
(4) Notwithstanding paragraph (1), the Viscount, by virtue of the Viscount’s office, is a person qualified for appointment as an insolvency manager.
(5) The Minister may by Order –
(a) amend paragraph (2) by adding, deleting or substituting bodies therein;
(b) amend paragraph (3) by adding, deleting, substituting or qualifying descriptions of persons therein.
31V Corrupt inducement affecting appointment as insolvency manager
A person who gives or agrees or offers to give a partner in or creditor of an insolvent limited liability partnership any valuable benefit with a view to securing the person’s own appointment or nomination, or to securing or preventing the appointment or nomination of some person other than himself or herself, as the insolvency manager, is guilty of an offence and liable to a fine or up to 2 years’ imprisonment or both.
31W Notification by insolvency manager of resignation etc.
(1) An insolvency manager who resigns, is removed or for any other reason vacates office shall, within 14 days after the resignation, removal or vacation of office, give notice thereof, signed by the insolvency manager, to the registrar and to the creditors.
(2) If default is made in compliance with paragraph (1), the insolvency manager is guilty of an offence and liable to a fine.
31X Notification of winding up of insolvent limited liability partnership
(1) When an insolvent limited liability partnership is being wound up, every invoice, order for goods or services or business letter issued by or on behalf of the limited liability partnership or the insolvency manager, being a document on or in which the name of the limited liability partnership appears, shall contain a statement that the limited liability partnership is subject to an insolvent winding up.
(2) If the insolvency manager of an insolvent limited liability partnership fails to comply with paragraph (1) the insolvency manager shall be guilty of an offence and liable to a fine.
31Y Bar against other proceedings in bankruptcy
The winding up of an insolvent limited liability partnership under this Part bars the right to take any other proceedings in bankruptcy except the right of a creditor to apply for a declaration under the Bankruptcy (Désastre) (Jersey) Law 1990.
31Z Disposal of records
(1) When an insolvent limited liability partnership has been wound up, and registration is about to be cancelled, its records and those of the insolvency manager may be disposed of in the way that the insolvency committee or, if there is no such committee, the creditors of the limited liability partnership, may direct.
(2) After 10 years from the cancellation of registration of the limited liability partnership, no responsibility rests on the limited liability partnership, the insolvency manager, or subject to Article 39, a person to whom the custody of the records has been committed, by reason of any record not being forthcoming to a person claiming to be interested in it.
(3) The Minister or the Commission may direct that for such period as he, she or it thinks proper (but not exceeding 10 years from the cancellation of registration of the limited liability partnership), the records of the insolvent limited liability partnership which has been wound up shall not be destroyed.
(4) If a person acts in contravention of a direction made for the purposes of this Article the person is guilty of an offence and liable to a fine not exceeding level 4 on the standard scale.”.
SCHEDULE 2[5]
(Regulation 2)
PART 5 OF THE PRINCIPAL LAW AS MODIFIED IN ITS APPLICATION TO INSOLVENT LIMITED LIABILITY PARTNERSHIPS
PART 5
DISSOLUTION AND WINDING UP, ETC.
20A Interpretation of Part 5
In this Part –
“insolvency manager” means, in relation to an insolvent limited liability partnership, the person for the time being appointed under Article 25C, 25E or 25F to be responsible for its insolvent winding up;
“insolvency committee” means, in relation to an insolvent limited liability partnership, the committee appointed under Article 25D.
20 Dissolution upon a change in the partners in a partnership
Subject to Article 21, a limited liability partnership shall not be dissolved by any change in the persons who are partners in it if the partnership agreement so provides.
21 Dissolution upon partnership ceasing to have 2 or more partners
(1) Notwithstanding any provision, express or implied, of the partnership agreement to the contrary, a limited liability partnership shall be dissolved immediately upon there ceasing to be 2 or more partners in the partnership.
(2) Where the person responsible for winding up the affairs of the limited liability partnership is the person who, at the time of dissolution, was the last remaining partner the person shall, within 28 days after the dissolution, deliver a statement of dissolution signed by him or her to the registrar.
(3) Where the person responsible for winding up the affairs of the limited liability partnership is not the person described in paragraph (2), the person shall, within 28 days after the day on which the person becomes the person so responsible, deliver a statement of dissolution signed by the person to the registrar.
(4) Upon delivery to the registrar of a statement under paragraph (2) or (3), the registrar shall register the statement and issue a certificate of dissolution.
(5) If default is made in compliance with paragraph (2), the person described in that paragraph is guilty of an offence.
(6) If default is made in compliance with paragraph (3), the person described in that paragraph is guilty of an offence.
22 Dissolution by act of partner or other occurrence
(1) Where a limited liability partnership is dissolved by any act of a partner or by any other occurrence, other than the occurrence described in Article 21(1), the designated partner shall, within 28 days after the dissolution, deliver to the registrar a statement of dissolution signed by him or her.
(2) Upon delivery to the registrar of a statement under paragraph (1), the registrar shall register the statement and issue a certificate of dissolution.
(3) If default is made in compliance with paragraph (1), the designated partner is guilty of an offence.
23 Power of Court to order dissolution
(1) The Court may, on the application of any partner in a limited liability partnership, order the dissolution of the partnership in any of the following cases –
(a) when a partner, other than the partner making the application, becomes in any way permanently incapable of performing his or her part of the partnership contract;
(b) when a partner, other than the partner making the application, has been guilty of such conduct as, in the opinion of the Court, regard being had to the nature of the business, is calculated to prejudicially affect the carrying on of the business;
(c) when a partner, other than the partner making the application, wilfully or persistently commits a breach of the partnership agreement, or otherwise so conducts himself or herself in matters relating to the partnership business that it is not reasonably practicable for the other partner or partners to carry on the business in partnership with him or her;
(d) when the business of the partnership can only be carried on at a loss; or
(e) whenever in any case circumstances have arisen which, in the opinion of the Court, render it just and equitable that the partnership be dissolved.
(2) Where the Court orders the dissolution of a limited liability partnership, the partner making the application shall deliver a copy of the order to the registrar within 28 days after it is made.
(3) Failure to comply with paragraph (2) is an offence.
24 Continuation of partnership following dissolution
* * * * *
25 Winding up
(1) Subject to paragraph (2) of this Article and to Article 25C(4) –
(a) in the event of the dissolution of a limited liability partnership in the circumstances described in Article 21(1), its affairs shall be wound up by the person who, at the time of dissolution, was the last remaining partner or, if the person is deceased, his or her personal representatives; and
(b) in the event of the dissolution of a limited liability partnership in any other circumstances, its affairs shall be wound up by a person appointed by the partners for the purpose or, if none, the designated partner, or if more than one, all of the designated partners.
(2) Subject to paragraph (2A), the Court may appoint a person to wind up the affairs of a limited liability partnership upon the application of –
(a) a partner in the partnership;
(b) * * * * *
(c) where the partnership is dissolved by the death of a partner, the personal representatives of that deceased partner.
(2A) No appointment may be made pursuant to paragraph (2) in respect of an insolvent limited liability partnership after an insolvency manager is first appointed for it.
(3) Subject to paragraph (3A), after the dissolution of a limited liability partnership, Article 15(2) to (4) shall only continue to apply so far as may be necessary or desirable to achieve a beneficial winding up of its affairs or to such lesser extent as the partnership agreement may provide.
(3A) Where the limited liability partnership is insolvent on dissolution or becomes insolvent following dissolution, notwithstanding that a partner continues to be an agent of the partnership, the partner’s ability to bind the partnership shall cease.
(4) Subject to paragraph (6A), upon the dissolution of a limited liability partnership in the circumstances described in Article 21(1), or upon the limited liability partnership ceasing to have 2 or more partners at any time during the winding up of its affairs following its dissolution in any other circumstances –
(a) the limited liability partnership shall cease to be a legal person;
(b) the limited liability partnership property vested in the limited liability partnership and the beneficial interest of the limited liability partnership in any limited liability partnership property held by any person on its behalf, shall vest in the person responsible for winding up the affairs of the limited liability partnership;
(c) any proceedings which might have been continued or commenced against the limited liability partnership may be continued or commenced against the person responsible for winding up the affairs of the limited liability partnership in the partner’s capacity as such;
(d) any judgment obtained against the limited liability partnership prior to its ceasing to have 2 or more partners and any judgment obtained against the person responsible for winding up the affairs of the partnership in the person’s capacity as such in any proceedings continued or commenced in accordance with sub-paragraph (c) shall only be enforceable against the limited liability partnership property.
(5) Subject to paragraph (6A), where the name of a limited liability partnership is inscribed in the Public Registry of Contracts as the holder of or having an interest in immovable property, the person responsible for winding up the affairs of the limited liability partnership, in whom that property or interest vests by virtue of paragraph (4)(b) shall deliver to the Judicial Greffier notice of the name of the person responsible for winding up the affairs of the limited liability partnership, in whom the property has vested, within 28 days after the property so vests.
(6) Subject to paragraph (6A), if default is made in compliance with paragraph (5) the person responsible for winding up the affairs of the limited liability partnership is guilty of an offence.
(6A) Where an insolvent limited liability partnership ceases to have 2 or more partners at any time following its dissolution and following the appointment of an insolvency manager for it, paragraphs (4), (5) and (6) shall apply as if any reference in them to the person responsible for winding up the affairs of the limited liability partnership was a reference to the insolvency manager.
25A Partnership insolvent upon or following dissolution
(1) Where a limited liability partnership is insolvent upon dissolution or becomes insolvent following dissolution, the person responsible for winding up its affairs –
(a) shall swear an affidavit recording the person’s opinion that the partnership is insolvent and deliver a copy of the affidavit to the registrar –
(i) where the limited liability partnership is insolvent upon dissolution, within 7 days of the dissolution, or
(ii) where the limited liability partnership becomes insolvent following dissolution, within 7 days of the insolvency;
and
(b) shall –
(i) by not less than 14 days’ notice given by post, call a meeting of the creditors of the limited liability partnership, to be held within Jersey within 28 days after that affidavit is sworn and, in the notice, nominate an insolvency manager,
(ii) when that notice is given to the creditors, deliver a copy of it to the registrar,
(iii) not less than 10 days before the day for which the meeting is called, give notice of the meeting by advertisement in the Jersey Gazette,
(iv) during the period before the creditors’ meeting is held, furnish any creditor free of charge with such information concerning the affairs of the limited liability partnership as the creditor may reasonably request, and
(v) make out a statement as to the affairs of the limited liability partnership, verified by affidavit, and lay that statement before the creditors’ meeting.
(2) If the person responsible for winding up the affairs of the limited liability partnership is qualified for appointment as its insolvency manager, the person may nominate himself or herself under paragraph (1)(b)(i).
(3) The person responsible for winding up the affairs of the limited liability partnership shall preside at the creditors’ meeting.
(4) The insolvent winding up of a limited liability partnership commences –
(a) where the partnership is insolvent upon dissolution, on the day of dissolution; and
(b) where the partnership becomes insolvent following dissolution, on the day on which the creditors’ meeting is held.
(5) If default is made in compliance with this Article, the person responsible for winding up the affairs of the limited liability partnership is guilty of an offence and liable to a fine.
25B Procedure and quorum at creditors’ meeting
(1) Subject to paragraphs (2), (3) and (4), every creditor who has been given notice of a creditors’ meeting shall be entitled to vote at the meeting or any adjournment of it.
(2) Votes shall be calculated according to the amount of the creditor’s debt on the day the insolvent winding up commences.
(3) A creditor shall not vote in respect of a debt for an unliquidated amount, or any debt whose value is not ascertained, except where the person responsible for winding up the affairs of the limited liability partnership agrees to put upon the debt an estimated minimum value for the purpose of entitlement to vote.
(4) For any resolution to pass at the creditors’ meeting there must be a majority in excess of one half in value of the creditors present in person or by proxy and voting on the resolution.
(5) A creditors’ meeting shall not be competent to act unless there are present in person or by proxy at least 3 creditors, or all of the creditors, if their number does not exceed 3, being in either case entitled to vote.
25C Appointment of insolvency manager
(1) The creditors at a creditors’ meeting may nominate an insolvency manager.
(2) The person nominated by the creditors to be insolvency manager or, if none, the person nominated by the person responsible for winding up the affairs of the limited liability partnership, is appointed with effect from the conclusion of the creditors’ meeting.
(3) In the case of different persons being nominated, a creditor or partner of the limited liability partnership or the person responsible for winding up its affairs may, within 7 days after the day on which the nomination was made by the creditors, apply to the Court for an order either –
(a) directing that the person nominated by the person responsible for winding up the affairs of the limited liability partnership shall be the insolvency manager instead of or jointly with the person nominated by the creditors; or
(b) appointing some other person to be the insolvency manager.
(4) Upon the appointment of the insolvency manager –
(a) all the powers and duties of the person responsible for winding up the affairs of the limited liability partnership shall cease;
(b) any limited liability partnership property and any beneficial interest of the limited liability partnership in any limited liability partnership property vested in the person responsible for winding up the affairs of the limited liability partnership pursuant to Article 25(4)(b) shall vest in the insolvency manager; and
(c) any proceedings which might have been continued or commenced against the person responsible for winding up the affairs of the limited liability partnership pursuant to Article 25(4)(c) may be continued or commenced against the insolvency manager in the person’s capacity as such.
(5) Where the name of the person responsible for winding up the affairs of the limited liability partnership is inscribed in the Public Registry of Contracts as the holder of or having an interest in immovable property which vests in the insolvency manager by virtue of paragraph (4)(b), the insolvency manager shall deliver to the Judicial Greffier notice of the name of the insolvency manager, in whom the property has vested, within 28 days after the property so vests.
(6) Any judgment obtained against the insolvency manager in the manager’s capacity as such in any proceedings continued or commenced in accordance with paragraph (4)(c) shall only be enforceable against the limited liability partnership property.
(7) The insolvency manager shall, within 14 days of the manager’s appointment, deliver notice thereof to the registrar and to the creditors.
(8) If default is made in compliance with paragraph (5) or (7), the insolvency manager is guilty of an offence and liable to a fine not exceeding level 4 on the standard scale and, in the case of a continuing offence, to a further fine not exceeding level 2 on the standard scale for each day on which the offence so continues.
25D Appointment of insolvency committee
(1) A creditors’ meeting may appoint an insolvency committee consisting of not more than 5 persons to exercise the functions conferred on it by this Part.
(2) If a committee is appointed, the partners of the limited liability partnership may appoint such number of persons not exceeding 5 as they think fit to act as members of the committee.
(3) The creditors may resolve that all or any of the persons so appointed by the partners ought not to be members of the committee and, if the creditors so resolve –
(a) the persons mentioned in the resolution are not then, unless the Court otherwise directs, qualified to act as members of the committee; and
(b) on an application to the Court under this provision, the Court may appoint other persons to act as such members in place of the persons mentioned in the resolution.
25E Remuneration of and vacancy in office of insolvency manager
(1) An insolvency manager is entitled to receive such remuneration as is agreed between the insolvency manager and the insolvency committee or, if there is no committee, between the insolvency manager and the creditors or, failing any such agreement, as is fixed by the Court.
(2) The creditors may at any time remove the insolvency manager (other than such a person appointed by the Court).
(3) If a vacancy occurs, by death, resignation or otherwise, in the office of the insolvency manager (other than such a person appointed by the Court) the creditors may appoint another insolvency manager.
(4) Where a vacancy in the office of insolvency manager is filled, either by appointment of the creditors or of the Court, Article 25C(4), (5), (6), (7) and (8) shall apply for the purposes of notification of the appointment to the registrar and the vesting of such property in, the continuation and commencement of such proceedings against and the payment of any amount to the new insolvency manager as was formerly vested in or might have been continued or commenced against or paid to the previous insolvency manager in the insolvency manager’s capacity as such, as if any reference in them to the person responsible for winding up the affairs of the limited liability partnership were a reference to the previous insolvency manager and any reference to the insolvency manager were a reference to the new insolvency manager.
25F Appointment or removal by the Court of insolvency manager
(1) If for any reason there is, in an insolvent winding up, no insolvency manager, the Court may appoint such a person.
(2) The Court may, on reason being given, remove an insolvency manager and appoint another.
25G No insolvency manager appointed
(1) This Article applies where an insolvent winding up has commenced but no insolvency manager has been appointed.
(2) During the period before the appointment of an insolvency manager, the powers of the person responsible for winding up the affairs of the limited liability partnership shall not be exercised except –
(a) with the sanction of the Court;
(b) to secure compliance with Article 25A; or
(c) to protect the limited liability partnership property.
(3) If the person responsible for winding up the affairs of the limited liability partnership contravenes paragraph (2) the person shall be guilty of an offence and liable to a fine or up to 6 months’ imprisonment or both.
26 Reference of questions and powers to the Court
(1) The insolvency manager, a partner in the partnership or a creditor of the partnership may apply to the Court for the Court to determine a question arising in an insolvent winding up, or exercise all or any of the powers which the Court or the Viscount might exercise if a declaration had been made in relation to the limited liability partnership under the Bankruptcy (Désastre) (Jersey) Law 1990.[6]
(2) The Court, if satisfied that the determination of the question or the required exercise of power will be just and beneficial, may accede wholly or partially to the application on such terms and conditions as it thinks fit or may make such other order on the application as it thinks just.
(3) An Act of the Court recording the making of an order under this Article staying the proceedings in the winding up shall, within 14 days after the making of the order, be delivered by the insolvency manager, or otherwise as may be ordered by the Court, to the registrar, who shall register it.
(4) If default is made in compliance with paragraph (3), the insolvency manager or other person ordered by the Court to deliver the Act is guilty of an offence and liable to a fine not exceeding level 4 on the standard scale and, in the case of a continuing offence, to a further fine not exceeding level 2 on the standard scale for each day on which the offence so continues.
27
27A Application of the law relating to désastre
(1) Subject to paragraph (2), in an insolvent winding up, the same rules prevail with regard to the respective rights of secured and unsecured creditors, to debts provable, to the time and manner of proving debts, to the admission and rejection of proof of debts, to the setting off of debts and, subject to the provision in Article 28(1) for the subordination of liabilities to partners and former partners to liabilities to other creditors, to the order of payment of debts as are in force for the time being with respect to persons against whom a declaration has been made under the Bankruptcy (Désastre) (Jersey) Law 1990 with the substitution of references to the insolvency manager and to the commencement of the insolvent winding up respectively for references to the Viscount and to the date of the declaration.
(2) Any surplus remaining after payment of the debts proved in the insolvent winding up, before being applied for any other purpose, shall be applied in paying interest on those debts which bore interest prior to the commencement of the insolvent winding up in respect of the period during which they have been outstanding since the commencement of the insolvent winding up and at the rate of interest applicable apart from the winding up.
27B Arrangement when binding on creditors
(1) An arrangement entered into between a limited liability partnership immediately preceding the commencement of an insolvent winding up and its creditors or, in the course of an insolvent winding up, between the insolvency manager and the creditors is (subject to the right of appeal under paragraph (2)) binding –
(a) on the limited liability partnership; and
(b) on the creditors, if acceded to by three-quarters in number and value of them.
(2) A creditor may, within 3 weeks from the completion of the arrangement, appeal to the Court against it; and the Court may thereupon, as it thinks just, amend, vary or confirm the arrangement.
28 Settling accounts on winding up
(1) Where accounts are settled in the course of the winding up of the affairs of a limited liability partnership, the liabilities of the partnership shall be paid in the following order of priority –
(a) subject to the provisions of any enactment as to preferential payments, liabilities to creditors, excluding any partner or former partner in the limited liability partnership in respect of the partner’s or former partner’s partnership interest or in respect of any loan made by the partner’s or former partner’s to the partnership for any purpose; then
(b) subject to the partnership agreement and to any agreement between the partnership and the former partner in question –
(i) liabilities to former partners in the limited liability partnership in respect of any loans made by them to the partnership for any purpose, then
(ii) liabilities to former partners in the limited liability partnership in respect of their partnership interests or otherwise; then
(c) subject to the partnership agreement –
(i) liabilities to partners in the limited liability partnership in respect of any loans made by them to the partnership for any purpose, then
(ii) liabilities to partners in the limited liability partnership in respect of their partnership interests or otherwise.
(2) Subject to the partnership agreement, any limited liability partnership property remaining after payment of the liabilities described in paragraph (1) shall be distributed equally to the partners.
(3) All costs, charges and expenses properly incurred in the winding up of an insolvent limited liability partnership, including the remuneration of the insolvency manager, are payable out of the limited liability partnership property in accordance with Article 27A(1) and paragraph (1) of this Article.
28A Meetings of insolvent limited liability partnership and creditors
(1) If an insolvent winding up continues for more than 12 months, the insolvency manager shall call a meeting of the partners in the limited liability partnership and a meeting of the creditors, to be held on the first convenient date within 3 months after the end of the first 12 months from the commencement of the insolvent winding up, and of each succeeding 12 months or such longer period as the Commission may allow, and shall lay before the meetings an account of the insolvency manager’s acts and dealings and of the conduct of the winding up during the preceding 12 months.
(2) If default is made in compliance with paragraph (1), the insolvency manager is guilty of an offence and liable to a fine not exceeding level 2 on the standard scale.
28B Insolvency manager’s report on completion of winding up
(1) As soon as the affairs of an insolvent limited liability partnership are fully wound up, the insolvency manager shall make up an account of the winding up, showing how it has been conducted and how the limited liability partnership property has been disposed of, and thereupon shall call a meeting of the partners in the limited liability partnership and a meeting of its creditors for the purpose of laying the account before the meetings and giving an explanation of it.
(2) Each such meeting shall be called by not less than 21 days’ notice sent by post, accompanied by a copy of the insolvency manager’s account.
28C
29 Completion of winding up
(1) Within 7 days after the date of the meetings described in Article 28B (or, if they are not held on the same day, after the date of the later one) the insolvency manager shall deliver to the registrar –
(a) subject to paragraphs (1A) and (1B), a statement signed by the insolvency manager of the holding of the meetings and their dates; and
(b) a copy of the insolvency manager’s account.
(1A) If a quorum is not present at the creditors’ meeting, the insolvency manager shall, in lieu of the statement required by paragraph (1)(a), deliver a statement that the meeting was duly called and that no quorum was present.
(1B) If all the partners, or so many of the partners as the partnership agreement requires, are not present at the partners’ meeting, the insolvency manager shall, in lieu of the statement required by paragraph (1)(a), deliver a statement that the meeting was duly called but not held.
(2) If default is made in compliance with paragraph (1), the insolvency manager is guilty of an offence.
30 Effect of declaration that a partnership is en désastre
(1A) For the purposes of Article 28(1) and (2), an insolvent limited liability partnership in respect of which there is a désastre shall be deemed to be subject to a winding up of its affairs.
(3) Where a declaration, or an order recalling a declaration, is made in respect of a limited liability partnership, the designated partner shall deliver a copy of the declaration or order to the registrar within 28 days of its being made.
(4) Upon delivery to the registrar of a copy of a declaration or of an order recalling a declaration, the registrar shall register it and issue a certificate to that effect.
(5) If default is made in compliance with paragraph (3), the designated partner is guilty of an offence.
(6) In this Article –
“declaration” shall have the same meaning as in the Bankruptcy (Désastre) (Jersey) Law 1990; and
“order recalling a declaration” shall be construed in accordance with Article 7 of that Law.
31 Cancellation of registration following insolvent winding up etc.
(1) Upon receipt of –
(a) a statement delivered to the registrar under Article 29; or
(b) notification under Article 36(3) of the Bankruptcy (Désastre) (Jersey) Law 1990,
in respect of an insolvent limited liability partnership, the registrar shall forthwith register the statement or notification.
(2) Subject to paragraph (3), at the end of 3 months from the registration of the statement or notification, the registrar shall cancel the entry in the register relating to the limited liability partnership and issue a certificate of cancellation to the insolvency manager or Viscount as the case may require.
(3) The Court may, on the application of the insolvency manager or Viscount, as the case may require, or of another person who appears to the Court to be interested, make an order deferring the date on which a certificate of cancellation of registration is issued to such date as the Court thinks fit.
(4) The person on whose application an order of the Court under paragraph (3) is made shall, within 14 days after the making of the order, deliver to the registrar the relevant Act of the Court for registration.
(5) If default is made in compliance with paragraph (4), the person on whose application the order is made shall be guilty of an offence and liable to a fine not exceeding level 4 on the standard scale and, in the case of a continuing offence, to a further fine not exceeding level 2 on the standard scale for each day on which the offence so continues.
(6) A certificate issued under paragraph (2) is conclusive evidence as to the cancellation of the registration of the limited liability partnership.
31A Powers and duties of insolvency manager
(1) An insolvency manager may, with the sanction of the Court or the insolvency committee (or, if there is no such committee, a meeting of the creditors) –
(a) pay a class of creditors in full;
(b) compromise any claim by or against the limited liability partnership.
(2) An insolvency manager may, without sanction, do anything, other than an act within paragraph (1), that may be required for the beneficial winding up of the limited liability partnership.
(3) An insolvency manager may summon a meeting of the partners of the limited liability partnership for the purpose of obtaining their sanction for any other purpose the insolvency manager may think fit.
(4) The insolvency manager shall pay the debts of the limited liability partnership in accordance with this Part.
(5) The appointment or nomination of more than one insolvency manager shall declare whether any act to be done is to be done by all or any one or more of them and, in default, any such act may be done by 2 or more of them.
31B Power to disclaim onerous property
(1) Subject to this Article, the insolvency manager may, within 6 months after the commencement of the insolvent winding up, by the giving of notice signed by the insolvency manager and referring to this Article and Article 31C to each person who is interested in or under any liability in respect of the property disclaimed, disclaim any onerous movable property, or any onerous immovable property situated outside Jersey, and may do so notwithstanding that the insolvency manager has taken possession of it, endeavoured to sell it or otherwise exercised rights of ownership in relation to it.
(2) For the purposes of this Article –
(a) onerous movable property is any –
(i) unprofitable contract, and
(ii) other movable property of the limited liability partnership which is unsaleable or not readily saleable or is such that it may give rise to a liability to pay money or perform any other onerous act;
(b) onerous immovable property is any immovable property of the limited liability partnership situated outside Jersey and having the characteristics mentioned in sub-paragraph (a)(ii).
(3) A disclaimer under this Article –
(a) shall operate so as to determine, as from the date of the disclaimer, the rights, interests and liabilities of the limited liability partnership in or in respect of the property disclaimed; but
(b) shall not, except so far as is necessary for the purpose of releasing the limited liability partnership from liability, affect the rights or liabilities of any other person.
(4) A person sustaining loss or damage in consequence of the operation of a disclaimer under this Article shall be deemed to be a creditor of the limited liability partnership to the extent of the loss or damage in the winding up.
31C Power of Court in respect of disclaimed property
(1) This Article applies where the insolvency manager has disclaimed property under Article 31B.
(2) An application may be made to the Court under this Article by –
(a) a person who claims an interest in the disclaimed property; or
(b) a person who is under a liability in respect of the disclaimed property, not being a liability discharged by the disclaimer.
(3) Subject to paragraph (4), the Court may, on an application under this Article, make an order on such terms as it thinks fit for the vesting of the disclaimed property in, or for its delivery to –
(a) a person entitled to it or a trustee for such a person; or
(b) a person subject to a liability mentioned in paragraph (2)(b) or a trustee for such a person.
(4) The Court shall not make an order by virtue of paragraph (3)(b) except where it appears to the Court that it would be just to do so for the purpose of compensating the person subject to the liability in respect of the disclaimer.
(5) The effect of an order under this Article shall be taken into account in assessing for the purpose of Article 31B(4) the extent of loss or damage sustained by a person in consequence of the disclaimer.
31D Unenforceability of liens on records
(1) Subject to paragraph (2), in an insolvent winding up, a lien or other right to retain possession of any records of a limited liability partnership shall be unenforceable to the extent that its enforcement would deny possession of those records to the insolvency manager.
(2) Paragraph (1) does not apply to a lien on documents which give a title to property and are held as such.
31E Transactions at an undervalue and preferences
(1) Subject to this Article, where an insolvent limited liability partnership has at a relevant time –
(a) entered into a transaction with any person at an undervalue; or
(b) given a preference to any person,
the insolvency manager may apply to the Court for such order as the Court thinks fit for restoring the position to what it would have been if the limited liability partnership had not entered into that transaction or given that preference, as the case may be.
(2) For the purposes of this Article, a limited liability partnership enters into a transaction with a person at an undervalue if the limited liability partnership –
(a) makes a gift to that person or otherwise enters into a transaction with that person on terms for which there is no “cause”; or
(b) enters into a transaction with that person for a “cause” the value of which, in money or money’s worth, is significantly less than the value, in money or money’s worth, of the “cause” provided by the limited liability partnership.
(3) For the purposes of this Article, a limited liability partnership gives a preference to a person if –
(a) that person is one of the creditors of the limited liability partnership or a surety or guarantor for any of the debts or other liabilities of the limited liability partnership; and
(b) the limited liability partnership –
(i) does anything, or
(ii) suffers anything to be done,
which has the effect of putting that person into a position which, in the event of the insolvent winding up of the limited liability partnership, will be better than the position the person would have been in if that thing had not been done.
(4) The Court shall not make an order under this Article in respect of a preference given to any person unless the limited liability partnership which gave it was influenced in deciding to give it by a desire to produce in relation to that person the effect referred to in paragraph (3)(b).
(5) Subject to paragraph (6), the time at which a limited liability partnership enters into a transaction at an undervalue or gives a preference is a relevant time if the transaction is entered into or the preference given –
(a) in the case of a transaction at an undervalue, at a time in the period of 5 years ending with the date of commencement of the insolvent winding up;
(b) in the case of a preference which is not a transaction at an undervalue, at a time in the period of one year ending with that date.
(6) Subject to paragraph (7), where a limited liability partnership enters into a transaction at an undervalue or gives a preference at a time mentioned in paragraph (5)(a) or (b), that time is not a relevant time unless the limited liability partnership –
(a) is at that time unable to pay its debts as they fall due; or
(b) becomes unable to pay its debts as they fall due in consequence of the transaction or preference.
(7) Paragraph (6) shall not apply to a transaction at an undervalue which takes place less than 2 years before the date of commencement of the insolvent winding up.
(8) In this Article, “cause” has the meaning assigned to it by the customary law of Jersey.
31F Responsibility of persons for wrongful trading
(1) Notwithstanding Article 5 but subject to paragraph (4), if, in the course of an insolvent winding up, it appears that paragraph (2) applies in relation to a person who is or has been a partner of the limited liability partnership, the Court, on the application of the insolvency manager, may, if it thinks it proper to do so, order that that person be personally responsible, without any limitation of liability, for all or any of the debts or other liabilities of the limited liability partnership arising after the time referred to in paragraph (2).
(2) This paragraph applies in relation to a person if –
(a) at some time before the date of commencement of the insolvent winding up that person –
(i) knew that there was no reasonable prospect that the limited liability partnership would avoid insolvency, or
(ii) on the facts known to the person was reckless as to whether the limited liability partnership would avoid insolvency; and
(b) that person was a partner in the limited liability partnership at that time.
(3) For the purposes of paragraph (2), a person shall not be treated as having had knowledge of any matter by reason only that another partner in the limited liability partnership had such knowledge.
(4) The Court shall not make an order under paragraph (1) with respect to any person if it is satisfied that after either condition specified in paragraph (2)(a) was first satisfied in relation to the person that person took reasonable steps with a view to minimizing the potential loss to creditors of the limited liability partnership.
(5) On the hearing of an application under this Article, the insolvency manager may give evidence or call witnesses.
(6) For the purposes of the conditions specified in paragraph (2)(a) of this Article, a limited liability partnership is insolvent if, within the meaning of Article 5(5), it is unable to pay its debts and, for the purpose of determining whether a limited liability partnership is so unable to pay its debts, paragraph (6) of that Article shall also apply as if the reference in it to the person denying liability under paragraph (3) or (4) of that Article were a reference to the person denying responsibility under this Article.
31G Responsibility for fraudulent trading
(1) If, in the course of an insolvent winding up, it appears that any business of the limited liability partnership has been carried on with intent to defraud creditors of the limited liability partnership or creditors of another person, or for a fraudulent purpose, the Court may, on the application of the insolvency manager, order that persons who were knowingly parties to the carrying on of the business in that manner are to be liable to make such contributions to the limited liability partnership property as the Court thinks proper.
(2) For the purposes of paragraph (1) a partner in a limited liability partnership shall not be treated as having been knowingly a party to the carrying on of the business in the manner described in that paragraph by reason only that another partner in the limited liability partnership was knowingly such a party.
(3) On the hearing of an application under this Article the insolvency manager may give evidence or call witnesses.
(4) Where the Court makes an order under this Article or Article 31F, it may give such further directions as it thinks proper for giving effect to the order.
(5) Where the Court makes an order under this Article or Article 31F in relation to a person who is a creditor of the limited liability partnership, it may direct that the whole or part of a debt owed by the limited liability partnership to that person and any interest thereon shall rank in priority after all other debts owed by the limited liability partnership and after any interest on those debts.
(6) This Article and Article 31F have effect notwithstanding that the person concerned may be criminally liable in respect of matters on the ground of which the order under paragraph (1) is to be made.
31H Extortionate credit transactions
(1) This Article applies in an insolvent winding up where the limited liability partnership is, or has been, a party to a transaction for, or involving, the provision of credit to the limited liability partnership.
(2) The Court may, on the application of the insolvency manager, make an order with respect to the transaction if the transaction is or was extortionate and was entered into in the period of 3 years ending with the commencement of the insolvent winding up.
(3) For the purposes of this Article, a transaction is extortionate if, having regard to the risk accepted by the person providing the credit –
(a) the terms of it are or were such as to require grossly exorbitant payments to be made (whether unconditionally or in certain contingencies) in respect of the provision of the credit; or
(b) it otherwise grossly contravened ordinary principles of fair dealing,
and it shall be presumed, unless the contrary is proved, that a transaction with respect to which an application is made under this Article is, or as the case may be, was extortionate.
(4) An order under this Article with respect to a transaction may contain one or more of the following as the Court thinks fit –
(a) provision setting aside the whole or part of an obligation created by the transaction;
(b) provision otherwise varying the terms of the transaction or varying the terms on which a security for the purposes of the transaction is held;
(c) provision requiring a person who is or was a party to the transaction to pay to the insolvency manager sums paid to that person, by virtue of the transaction, by the limited liability partnership;
(d) provision requiring a person to surrender to the insolvency manager property held by the person as security for the purposes of the transaction;
(e) provision directing accounts to be taken between any persons.
31J Application of provisions to insolvent limited liability partnership en désastre
Articles 31F, 31G and 31H shall apply to an insolvent limited liability partnership in respect of which a désastre is declared under the Bankruptcy (Désastre) (Jersey) Law 1990 as if –
(a) any reference to an insolvent winding up was a reference to a désastre; and
(b) any reference to the insolvency manager was a reference to the Viscount.
31K Delivery and seizure of property
(1) Where a person has in the person’s possession or control property or records to which a limited liability partnership appears in an insolvent winding up to be entitled, the Court may require that person forthwith (or within a period which the Court may direct) to pay, deliver, convey, surrender or transfer the property or records to the insolvency manager.
(2) Where –
(a) the insolvency manager seizes or disposes of property which is not property of the limited liability partnership; and
(b) at the time of seizure or disposal the insolvency manager believes, and has reasonable grounds for believing, that the insolvency manager is entitled (whether in pursuance of an order of the Court or otherwise) to seize or dispose of that property,
the insolvency manager shall not be liable to any person in respect of loss or damage resulting from the seizure or disposal except in so far as that loss or damage is caused by the negligence of the insolvency manager, and shall have a lien on the property, or the proceeds of its sale, for expenses incurred in connection with the seizure or disposal.
31L Duty to co-operate with insolvency manager
(1) In an insolvent winding up, each of the persons mentioned in paragraph (2) shall –
(a) give the insolvency manager information concerning the limited liability partnership and its establishment, business, dealings, affairs, or property which the insolvency manager may at any time after the commencement of the insolvent winding up reasonably require; and
(b) attend on the insolvency manager at reasonable times and on reasonable notice when requested to do so.
(2) The persons referred to in paragraph (1) are –
(a) those who are, or have at any time been, partners in the limited liability partnership;
(b) those who are in the employment of the limited liability partnership, or have been in its employment within one year before the commencement of the insolvent winding up, and are in the opinion of the insolvency manager capable of giving information which the insolvency manager requires; and
(c) those who are, or have within that year been, partners in or in the employment of another partnership which is or was a partner in the limited liability partnership in question or officers of, or in the employment of any person who is or was a partner in the limited liability partnership in question.
(3) For the purposes of paragraph (2), “employment” includes employment under a contract for services (contrat de louage d’ouvrage).
(4) Default in compliance with any obligation imposed by this Article is an offence liable to a fine or up to 6 months’ imprisonment or to both.
31M Insolvency manager to report criminal offences
(1) If it appears to the insolvency manager that any person has been guilty of an offence in relation to the limited liability partnership for which that person is criminally liable, the insolvency manager shall –
(a) forthwith report the matter to the Attorney General; and
(b) furnish the Attorney General with information and give the Attorney General access to, and facilities for inspecting and taking copies of, documents (being information or documents in the possession of or under the control of the insolvency manager and relating to the matter in question) as the Attorney General requires.
(2) Where a report is made to the Attorney General under paragraph (1), the Attorney General may refer the matter to the Minister or the Commission for further enquiry; and the Minister or the Commission, as the case may be –
(a) shall thereupon investigate the matter; and
(b) may also, if they think it necessary for the purposes of their investigation, investigate the affairs of any partner in the limited liability partnership or of any company of which the limited liability partnership is a member and controls the composition of the board of directors or of which the limited liability partnership holds more than half in nominal value of the equity share capital, or of any director or employee of such a company; and shall report upon the affairs of the partner, company, director or employee so far as they think that the results of their investigation of that person’s affairs are relevant to the investigation of the affairs of the limited liability partnership.
(3) The Minister or the Commission may appoint one or more inspectors to carry out an investigation and report to he or she for the purposes of paragraph (2).
(4) If it appears to the Court in the course of an insolvent winding up that any person has been guilty as mentioned in paragraph (1), and that no report with respect to the matter has been made by the insolvency manager to the Attorney General under that paragraph, the Court may (on the application of a person interested in the insolvent winding up or of its own motion) direct the insolvency manager to make such a report; and on a report being made accordingly this Article shall have effect as though the report had been made in pursuance of paragraph (1).
31N Obligations and powers arising under Article 31M
(1) If the Minister, the Commission or an inspector appointed by either of them to carry out an investigation considers that any person is or may be in possession of information relating to a matter which they believe to be relevant to an investigation pursuant to Article 31M(2), the Minister, the Commission or inspector may require the person –
(a) to produce and make available to them all records in the person’s custody or power relating to that matter;
(b) at reasonable times and on reasonable notice, to attend before them; and
(c) otherwise to give them all assistance in connection with the investigation which the person is reasonably able to give,
and it is that person’s duty to comply with the requirement.
(2) The Minister, the Commission or an inspector appointed by either of them to carry out an investigation may, for the purposes of the examination, examine on oath any such person as is mentioned in paragraph (1), and may administer an oath accordingly.
(3) An answer given by a person to a question put to the person in exercise of the powers conferred by paragraph (1) may not be used by the prosecution in evidence against the person in any criminal proceedings except for the purposes of proceedings under paragraph (7) or Article 31Q.
(4) Where the Minister, the Commission or an inspector appointed by either of them to carry out an investigation has reasonable grounds for believing that any partner or former partner in or director or past director of the person whose affairs are being investigated maintains or has maintained a bank account of any description, whether alone or jointly with another person and whether in Jersey or elsewhere, into or out of which there has been paid money which has been in any way connected with an act or omission, or series of acts or omissions, which constitutes misconduct (whether fraudulent or not) on the part of that partner or former partner or director or past director towards the person or its remaining partners or its members, as the case may be, the Minister, the Commission or the inspector may require the partner or former partner or director or past director to produce and make available to the Minister, the Commission or inspector, as the case may be, all records in the partner’s or former partner’s or director’s or former director’s possession or under their control relating to that bank account.
(5) Where criminal proceedings are instituted by the Attorney General following a report or reference under Article 31M the insolvency manager and every partner, agent and employee of the limited liability partnership past and present (other than the defendant) shall give the Attorney General any assistance in connection with the prosecution which they are is reasonably able to give; and for the purpose “agent” includes a banker, advocate or solicitor of the limited liability partnership and a person employed by the limited liability partnership as auditor.
(6) If a person fails or neglects to give assistance as required by paragraph (5), the Court may, on the application of the Attorney General, direct the person to comply with that paragraph; and if the application is made with respect to an insolvency manager, the Court may (unless it appears that the failure or neglect to comply was due to the insolvency manager not having in his or her hands sufficient assets of the limited liability partnership to enable him or her to do so) direct that the costs shall be borne by the insolvency manager personally.
(7) A person who knowingly or recklessly makes to the Minister, the Commission or an inspector appointed by either of them any statement, whether written or oral, which conveys, or purports to convey, any information or explanation which the Minister, the Commission or inspector requires, or is entitled to require, in the course of an investigation and is misleading, false or deceptive in a material particular, is guilty of an offence and liable to a fine or to imprisonment for a term not exceeding 2 years, or to both.
31P Authority for search
(1) An inspector appointed under Article 31M(3) may for the purpose of the investigation apply to the Bailiff for a warrant under this Article in relation to specified premises.
(2) If the Bailiff is satisfied that the conditions in paragraph (3) are fulfilled the Bailiff may issue a warrant authorizing a police officer and any other person named in the warrant to enter the specified premises (using such force as is reasonably necessary for the purpose) and to search them.
(3) The conditions referred to in paragraph (2) are –
(a) that there are reasonable grounds for suspecting that there is on the premises material (whether or not it can be particularised) which is likely to be of substantial value (whether by itself or together with other material) to the investigation for the purpose of which the application is made; and
(b) that the investigation for the purposes of which the application is made might be seriously prejudiced unless immediate entry can be secured to the premises.
(4) Where a person has entered premises in the execution of a warrant issued under this Article, the person may seize and retain any material, other than items subject to legal professional privilege, which is likely to be of substantial value (whether by itself or together with other material) to the investigation for the purpose of which the warrant was issued.
(5) In this Article, “premises” includes any place and, in particular, includes –
(a) any vehicle, vessel, aircraft or hovercraft;
(b) any offshore installation; and
(c) any tent or movable structure.
(6) Any person who wilfully obstructs any person acting in the execution of a warrant issued under this Article is guilty of an offence and liable to a fine or up to 2 years’ imprisonment or both.
31Q Failure to co-operate with Minister, Commission or inspector
(1) If any person –
(a) fails to comply with a requirement under Article 31N; or
(b) refuses to answer any question put to the person by the inspectors for the purpose of the investigation,
the Minister, the Commission or the inspector may certify the refusal in writing to the Court.
(2) The Court may thereupon inquire into the case and, after hearing any witness who may be produced against or on behalf of the alleged offender and any statement in defence, the Court may punish the offender as if the offender had been guilty of contempt of the Court.
31R Inspector’s report to be evidence
(1) A copy of a report of an inspector certified by whichever of the Minister or the Commission appointed the inspector to be a true copy, is admissible in legal proceedings as evidence of the opinion of the inspector in relation to a matter contained in the report.
(2) A document purporting to be a certificate mentioned in paragraph (1) shall be received in evidence and be deemed to be such a certificate unless the contrary is proved.
31S Privileged information
Nothing in this Part requires the disclosure or production to the Minister or the Commission or to an inspector appointed by either of them –
(a) by a person of information or records which the person would in an action in the court be entitled to refuse to disclose or produce on the grounds of legal professional privilege in proceedings in the court except, if the person is a lawyer, the name and address of the person’s client;
(b) by a limited liability partnership’s bankers (as such) of information or records relating to the affairs of any of their customers other than the limited liability partnership or other person under investigation.
31T Enforcement of duty of partner or insolvency manager to make returns etc.
(1) If, in an insolvent winding up, a partner or the insolvency manager who has defaulted in delivering a document or in giving any notice which the partner or insolvency manager is by law required to deliver or give, fails to make good the default within 14 days after the service on the partner or insolvency manager of a notice requiring the partner or insolvency manager to do so, the Court has the following powers.
(2) On an application made by a creditor or by the registrar, the Court may make an order directing the partner or the insolvency manager to make good the default within the time specified in the order.
(3) The Court’s order may provide that costs of and incidental to the application shall be borne, in whole or in part, by the partner or the insolvency manager personally.
(4) Nothing in paragraph (1) prejudices the operation of any enactment imposing penalties on a partner or an insolvency manager in respect of a default mentioned therein.
31U Qualifications of insolvency manager
(1) A person who is not an individual is not qualified to act as an insolvency manager.
(2) A person is not qualified to be appointed as an insolvency manager unless the person is a member of –
(a) the Institute of Chartered Accountants in England and Wales;
(b) the Institute of Chartered Accountants of Scotland;
(c) the Association of Chartered Certified Accountants; or
(d) the Institute of Chartered Accountants in Ireland.
(3) None of the following persons is so qualified –
(a) a partner in or employee of the limited liability partnership;
(b) any partner in a partnership which is itself a partner in the limited liability partnership;
(c) any officer or employee of a company which is a partner in the limited liability partnership; or
(d) where a partner in the limited liability partnership is also a partner in another partnership, any partner in that partnership.
(4) Notwithstanding paragraph (1), the Viscount, by virtue of the Viscount’s office, is a person qualified for appointment as an insolvency manager.
(5) The Minister may by Order –
(a) amend paragraph (2) by adding, deleting or substituting bodies therein;
(b) amend paragraph (3) by adding, deleting, substituting or qualifying descriptions of persons therein.
31V Corrupt inducement affecting appointment as insolvency manager
A person who gives or agrees or offers to give a partner in or creditor of an insolvent limited liability partnership any valuable benefit with a view to securing the person’s own appointment or nomination, or to securing or preventing the appointment or nomination of some person other than himself or herself, as the insolvency manager, is guilty of an offence and liable to a fine or up to 2 years’ imprisonment or both.
31W Notification by insolvency manager of resignation etc.
(1) An insolvency manager who resigns, is removed or for any other reason vacates office shall, within 14 days after the resignation, removal or vacation of office, give notice thereof, signed by the insolvency manager, to the registrar and to the creditors.
(2) If default is made in compliance with paragraph (1), the insolvency manager is guilty of an offence and liable to a fine.
31X Notification of winding up of insolvent limited liability partnership
(1) When an insolvent limited liability partnership is being wound up, every invoice, order for goods or services or business letter issued by or on behalf of the limited liability partnership or the insolvency manager, being a document on or in which the name of the limited liability partnership appears, shall contain a statement that the limited liability partnership is subject to an insolvent winding up.
(2) If the insolvency manager of an insolvent limited liability partnership fails to comply with paragraph (1) the insolvency manager shall be guilty of an offence and liable to a fine.
31Y Bar against other proceedings in bankruptcy
The winding up of an insolvent limited liability partnership under this Part bars the right to take any other proceedings in bankruptcy except the right of a creditor to apply for a declaration under the Bankruptcy (Désastre) (Jersey) Law 1990.
31Z Disposal of records
(1) When an insolvent limited liability partnership has been wound up, and registration is about to be cancelled, its records and those of the insolvency manager may be disposed of in the way that the insolvency committee or, if there is no such committee, the creditors of the limited liability partnership, may direct.
(2) After 10 years from the cancellation of registration of the limited liability partnership, no responsibility rests on the limited liability partnership, the insolvency manager, or subject to Article 39, a person to whom the custody of the records has been committed, by reason of any record not being forthcoming to a person claiming to be interested in it.
(3) The Minister or the Commission may direct that for such period as he, she or it thinks proper (but not exceeding 10 years from the cancellation of registration of the limited liability partnership), the records of the insolvent limited liability partnership which has been wound up shall not be destroyed.
(4) If a person acts in contravention of a direction made for the purposes of this Article the person is guilty of an offence and liable to a fine not exceeding level 4 on the standard scale.
Endnotes
Table of Legislation History
Legislation
Year and No
Commencement
Limited Liability Partnerships (Insolvent Partnerships) (Jersey) Regulations 1998
R&O.9232
9 September 1998
Limited Liability Partnerships (Insolvent Partnerships) (No. 2) (Jersey) Regulations 1998
R&O.9277
9 September 1998
States of Jersey (Amendments and Construction Provisions No. 4) (Jersey) Regulations 2005
R&O.44/2005
9 December 2005
Limited Liability Partnerships (Amendment of Law) (Jersey) Regulations 2013
R&O.4/2013
17 January 2013
Table of Renumbered Provisions
Original
Current
1
Spent, omitted
2
1
3
2
4
3
First Schedule
Schedule 1
Second Schedule
Schedule 2
Table of Endnote References
[1]
These Regulations have been amended by the States of Jersey (Amendments and Construction Provisions No. 4) (Jersey) Regulations 2005. The amendments replace all references to a Committee of the States of Jersey with a reference to a Minister of the States of Jersey, and remove and add defined terms appropriately, consequentially upon the move from a committee system of government to a ministerial system of government.
[2]
chapter 13.475
[3] Schedule 1
amended by R&O.9277, R&O.4.2013
[4]
chapter 04.160
[5] Schedule 2
amended by R&O.9277, R&O.4/2013
[6]
chapter 04.160
