MINISTER FOR ECONOMIC DEVELOPMENT
Bankruptcy (Désastre) (Jersey) Order 2006 (the “Order”)
1 THE ISSUE
1.1 The Bankruptcy (Désastre) (Amendment No.5) (Jersey) Law 2006 is expected to come into force on 1 August 2006. The Bankruptcy Law has always been supplemented by Rules made by the Superior Number of the Royal Court. However, during the drafting of Amendment No.5 it was felt that those Rules contained matters of both procedure and policy, and that matters of policy should more properly be set out in an order made by the Minister. The Order, a copy of which is annexed to this paper, sets out these matters of policy.
2 BACKGROUND
2.1 The Bankruptcy (Désastre) Law is the Island’s principal law relating to insolvency. The désastre is a flexible mechanism for dealing with the assets and liabilities of insolvent debtors, both individuals and bodies corporate. Insolvency is, however, a complex and often costly procedure and it is necessary to supplement the law with additional detail relating to the désastre, particularly by establishing certain “thresholds” that will apply in relation to insolvency.
2.2 The Order proposes the following:
2.2.1 Increasing the amount that a creditor must be owed before he can instigate a désastre from £1,000 to £3,000;
2.2.2 Confirming that a bankrupt shall only be guilty of the offence of failing to keep proper records if his unsecured liabilities at the date of the désastre exceed £20,000;
2.2.3 Confirming that a debtor commits an offence if he obtains credit in excess of £250 during a désastre without informing the intending creditor of the désastre;
2.2.4 Increase the amount payable in a desastre to employees of the debtor prior to payment of the debtor’s general creditors from £2,500 in total to £4,500, being divided into a maximum of £3,500 in respect of unpaid salaries and £1,000 in respect of holiday pay and bonuses.
2.3 All of the changes are supported and have been the subject of full consultation with the Viscount’s department. The overall effect of the changes is to ensure that the désastre remains an effective and equitable way of dealing with the estate of a bankrupt.
2.4 Once made, the Order will come into effect on the same day that the Bankruptcy (Désastre) (Amendment No.5) (Jersey) Law takes effect.
3 RECOMMENDATION
3.1 It is recommended that the Minister approve the Order, and instruct the Director, Finance Industry Development, to notify the States Greffe, the Departmental liaison officer and the law draftsman before forwarding the Order to the Greffe for archiving.
PAUL DE GRUCHY
Director, Finance Industry Development
23 June 2006
ANNEX