Explanation of Manx Liquidation Law

Explanation of Manx Liquidation Law

Explanation of Manx Liquidation Law - from IOM Legal Rep.
The law of the IOM usually follows that of England closely, sometimes we are a year or two behind, sometimes we pick up a solution from another commonwealth, common law country. That being said we have substantial differences in our approach to some areas of law.

Our courts system will be familiar with magistrates and a Crown Court equivalent and with small claims and High Court, no County Court. Our profession is fused, we act as both barristers and solicitors and with about 250 members there are a number of senior advocates who, if in London would have taken silk.

Insolvency is one area however where we have not kept up. Our personal bankruptcy laws are based on UK equivalents from the 1890’s. The application is harsh, we have no IVA’s. Once bankrupt you have to pay off a substantial sum before discharge. The system still punishes rather than tries to rehabilitate. No moral judgment by me here, just a statement of fact.

The Company procedure is based on the same moral code and dates to the provisions of the 1929 UK legislation. No thoughts for breathing space or administration to trade through and recover or to regroup, or sell off assets. It’s a matter of 'can you pay debts as they fall due or not?'

What this means is that we do not have the flexibility inherent in the UK system. You will notice that Kaupthing in UK is in administration, not liquidation, at least for now. The adjournment here by our Treasury has been to try and buy time for a sale of performing underlying assets and to resolve, politically the position vis a vis the £500 million, with which KSF IOM would be solvent and without which it is not.

In my view short of emergency Tynwald legislation there is nothing more to be done and liquidation is the only way forward if the £500 million is not resolved shortly. Clearly there is going to be litigation between the UK administrators and the IOM Liquidator over that fund. In the meantime the bank cannot pay its debts as and when they fall due, is by definition insolvent and must be liquidated.

Judicial Review does exist in the IOM. It is not subject to the same statutory framework that now covers the prerogative orders in England but English case law is helpful. We have what are termed Petitions of Doleance. They serve the same scope as prerogative orders, being able to quash decisions, to direct a governmental or administrative body to do something or not do something ( certiorari, mandamus and prohibition) and also as a form of habeas corpus

By statutory amendment you can also claim damages, however you cannot use the weapon of a Petition of Doleance as a fishing expedition to gather evidence. So I am not sure how useful they are going to be for any of you, singly or as group. Changing the decision now will not stop the consequence of what has happened in the interim in the bank, far less give rise to a good cause of action for damages for loss due to the liquidation and freezing of your assets.

It is too early to predict what claims might arise, against the Icelandic authorities, against the parent under the guarantee, against the regulators in UK, IOM and Iceland. Against the UK government for placing the UK company into administration. They will all need careful examination.

IMPORTANT

Please note that the content of this site is no longer regularly updated, and much of it may be outdated.

See this page for alternative sites.

Main Menu