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22 May 2020
The states of Guernsey imposed a 14-day self-isolation period for all entrants to the Bailiwick from 19 March 2020 and imposed a lockdown system for all residents, apart from essential workers, on 25 March 2020. Until 31 May 2020, there will be no flights from or to the Bailiwick, except for a daily flight to Southampton which is primarily for medical needs. While there are a number of COVID-19 cases in Guernsey (and 13 COVID-19 related deaths so far), at the time of writing, no cases had been reported in Sark or Alderney.
Financial services firms are working remotely and there has been no business interruption, with the island's internet infrastructure seemingly able to cope with the new way of working. The various arms of government are also working remotely, with states of Guernsey meeting attendees observing social distancing measures. The Magistrate's Court continues to operate for urgent cases, and the Royal Court sits to hear urgent family or childcare cases and sits remotely (using Microsoft Teams) to hear ongoing civil cases. Parties are encouraged to agree interlocutory directions where possible and, if appropriate, ask for a determination on the papers. The Guernsey Financial Services Commission also continues to operate as normal (albeit with remote working), with a number of minor derogations as detailed below.
Many of the key emergency legislative measures put in place by the states of Guernsey have been aimed at protecting the local economy, with the focus on the prevention of insolvency rather than insolvency itself.(1)
Some of the key measures introduced by the states include the following:
In addition, it is understood that the states are looking at others to prevent the insolvency of local businesses. These may include:
As Guernsey has no personal insolvency regime, measures may be put in place to make it harder for landlords to evict tenants and to prevent the enforcement of judgments over personalty on a temporary basis.
On 24 March 2020 the Guernsey Financial Services Commission issued a statement recognising that some entities would struggle to meet their regulatory obligations. However, the derogations permitted by the commission are of a purely practical nature and do not permit regulated businesses to deviate from the substantive conditions of their licences. Thus, the commission has:
In addition, there has been some guidance that the economic substance rules will be relaxed insofar as the Guernsey Revenue Service will take a pragmatic view of the requirement to hold board meetings in Guernsey if this is impossible because of travel restrictions.(2)
The potential measures regarding statutory demands and winding-up applications apply equally to regulated and international businesses. However, it is unlikely that these measures will prevent the commission, or the directors, from initiating administration or winding-up proceedings in relation to a distressed company.
It remains to be seen whether Guernsey will follow the proposed measures in the United Kingdom by changing the rules regarding wrongful trading and introducing legislation to allow the cram-down of stakeholder rights in schemes of arrangement, making reorganisations and restructurings easier in the short term. Given the nature of business in the Bailiwick, it is unlikely that such reforms would be introduced at short notice, with the principal objective of the emergency measures being to protect the local economy, and local trading businesses, as much as possible.
For further information on this topic please contact Christopher Jones or Mathew Newman at Ogier by telephone (+441481 721 672) or email (email@example.com or firstname.lastname@example.org). The Ogier website can be accessed at www.ogier.com.
(1) This article focuses on measures to prevent the insolvency of local businesses. For an overview of all measures introduced by the states of Guernsey with regard to COVID-19, please see "COVID-19 restructuring and corporate recovery measures".
(2) Further information is available here.
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