Recognising Jersey's Viscount
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Nicola Roberts discusses the recognition of Jersey's Viscount by the High Court for the first time in 40 years
In its recent decision in the Representation of the Viscount [2017] JRC 025, the Royal Court of Jersey has provided a further endorsement of the capability of the Jersey insolvency regime to deal with complex cross-border insolvency. It is the third decision from the court concerning the high-profile insolvency of Jersey company Orb a.r.l and its sole shareholder Dr Gail Cochrane and follows earlier decisions to refuse to place Orb into English law administration and declare the company and Dr Cochrane en désastre (bankrupt). It is estimated that Dr Cochrane and Orb owe creditors the combined sum of £1.3bn.
In this case the Viscount (the official insolvency officeholder of Jersey) sought and was granted two letters of request to be issued by the Royal Court to the High Court of England and Wales requesting its assistance in accordance with section 426 of the Insolvency Act 1986 in respect of each of the désastres of Orb and Dr Cochrane. The letters broadly sought the recognition of the Viscount in England with authority to exercise various powers to ascertain information about the parties’ assets and to gather in relevant documents and to exercise various powers of investigation.
The background to the proceedings covers the theft of around £35m from a company called Izodia by Dr Cochrane’s former husband Dr Gerald Smith in late 2002 – most of the proceeds of the theft were misapplied to the benefit of Orb. Once the theft had been discovered, Orb sold a substantial proportion of its assets to a third party, who transferred them into a complex structure. It is asserted that there was an oral agreement between Orb and the third party, not reflected in the sale agreement, that Orb would continue to benefit from the assets that it had sold and the proceeds of their development.
Following an investigation by the Serious Fraud Office, Dr Smith pleaded guilty to a number of charges and was sentenced to eight years in prison, and was the subject of a £41m confiscation order. The proceedings before the courts arise from litigation funder Harbour’s efforts to recover money and assets from Dr Cochrane and Orb.
The Royal Court was prepared to make a wide request for assistance, including asking the English court to authorise the Viscount to exercise such of her powers and functions as may be necessary (including the power to intervene in, prosecute, defend, or apply for a stay in various sets of proceedings currently before the English courts and to ascertain information and gather in relevant documents relating to assets of Dr Cochrane and/or Orb). If the request is accepted, it will be the first time Jersey’s Viscount has been recognised by the High Court for nearly 40 years.
Throughout the trio of cases that have come before it, the Royal Court has given clear support to the view that Jersey, as a well-respected financial centre, should discharge its responsibility for dealing with the affairs of a resident company and resident by granting an application by the Viscount. The decisions to date demonstrate that it cannot be assumed that the door to UK administration is always going to be open and the Royal Court will closely examine the facts in order to determine whether English law administration is in fact suitable for a Jersey company in all the circumstances.
Nicola Roberts is counsel in Ogier’s Jersey dispute resolution team