- within Accounting and Audit, Immigration and Insurance topic(s)
KEY TAKEAWAYS
- We are seeing increased interest in relation to the practicalities of enforcement by a receiver of English law security granted by an offshore entity.
- There are no formal requirements for Guernsey, Jersey and BVI companies to make a public registration of any foreign law security granted, but there are priority related benefits for a BVI company in doing so.
- The concept of using receivers for security enforcement is not a part of Guernsey or Jersey law. However, there are no specific formalities that an English law appointed receiver needs to take in those jurisdictions to exercise its powers over English assets held by a Guernsey or Jersey entity.
We are seeing an increasing number of enquiries from lenders and their advisors in respect of the practicalities of enforcement by receivers of English security granted by overseas entities. Real estate property transactions are commonly structured through offshore finance centres, such as Jersey, Guernsey and the British Virgin Islands ("BVI"), with such overseas entities granting English law security over property located in England.
On entry into English law security and on enforcement, security granted over English assets by Jersey and Guernsey entities does not need to be registered in Jersey and Guernsey respectively. Jersey and Guernsey do not maintain any register of security for foreign law governed security documents. In Jersey, only Jersey law security may be registered on the Jersey Security Interests Register. BVI Companies are legally required to record particulars of security granted on an internal register of charges. Although there is no legal requirement to register BVI security on a public register, doing so is advisable for the purposes of protecting the priority of the security.
The concept of a receiver is also not contained in the law of Jersey and Guernsey. However, notwithstanding this, a foreign receiver may be appointed over English assets owned by Jersey and Guernsey entities and such receiver would not be required to file appointment documents in Jersey or Guernsey with any regulatory authority. BVI statute expressly permits the appointment of receivers in respect of the assets of a BVI company and such receivers may be appointed either out of court or by way of court order. Typically, a receiver appointed in respect of English situs assets held by a BVI Company would be a UK insolvency practitioner.
Of course, the enforcement of Jersey, Guernsey or BVI security should not be ruled out as another viable option. Our briefings on enforcement of local security can be found here:
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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