Hassans’ unparalleled in-house expertise makes the firm the natural choice for the swift and equitable resolution of insolvency cases, both personal and corporate. We have acted, and continue to act, on a range of high-profile insolvency cases in Gibraltar and abroad, thanks to our extensive network of legal partners in various key international jurisdictions.
In addition to assisting on delicate matters such as assets and debt collection, we can also act either as intermediaries or directly on your behalf in matters pertaining to liquidations, administration and bankruptcy proceedings – always with the utmost care, professionalism and discretion.
As a British overseas territory, Gibraltar insolvency law is based on English common law, with all the legislative benefits that entails. As Gibraltar is a legally autonomous territory, however, insolvency disputes are subject to local Gibraltar law, specifically, The Insolvency Act 2011.
Definition of Insolvency
A company is deemed insolvent under the Insolvency Act 2011 where it is unable to pay its debts as they fall due, or the value of its liabilities exceeds its assets. A company is presumed insolvent if it fails to comply with the requirements of a statutory demand that has not been set aside, or execution on a judgment in favour of a creditor of the company is returned unsatisfied.
In determining how a company (or individual) can meet its financial obligations to creditors, the company’s liquid and fixed assets must be closely examined. This, in turn, will determine the next stages in the insolvency process, principally whether the company can be liquidated, or if it will be forced to declare bankruptcy.
The Insolvency Act 2011
The Insolvency Act of 2011, which came into effect in November 2014, was created to primarily replace the Bankruptcy Act 1934, in addition to specific provisions of the Companies Act 1932 pertaining to the liquidation of companies.
One of the primary functions of the act is to define the specific conditions whereby a company can enter into voluntary liquidation, allowing for a more mutually-equitable agreement between the company and its creditors.
When these conditions cannot be met, for one reason or another, the act is concerned with specifying the conditions and obligations of non-voluntary insolvency resolutions; Administration, Liquidation, Bankruptcy and Receivership.
Gibraltar Insolvency FAQs
- What does a Voluntary Insolvency entail?
There are two types of voluntary insolvencies, a Company Voluntary Insolvency (CVA) or an Individual Voluntary Insolvency (IVA), for insolvent companies and individuals respectively. In both cases, these agreements exist to help the insolvent party avoid the painful process of liquidation or bankruptcy proceedings. This is achieved through a specific payment plan agreement between the insolvent party and its creditors, allowing the company or individual to repay its debt over a set time period, mediated, managed and overseen by an Insolvency Practitioner.
The advantage of such an arrangement is that, provided the creditors agree to the arrangement, the insolvent party is, in essence, given some breathing room whereby they can continue to operate and retain control of their operations, provided they continue to repay their debts as per the agreement.
- What does the administration of a Gibraltar company involve?
The Administration provisions can be found in Part 3 of the Insolvency Act. It provides a company with a window of opportunity to try to rescue its ailing business during a period when the company structure is effectively preserved and creditors are prevented from taking any legal steps against the company.
- How is an Administrator appointed in Gibraltar insolvency proceedings?
Generally, an Administrator is appointed by an Administrative Order made by the Court. The Court is required to be satisfied that the company is either actually, or likely to be insolvent. The court must be further satisfied, in the context of the actual/potential insolvency of a company, that the appointment of an administrator is desirable either in terms of the potential rescue of the company or, in the event that liquidation is unavoidable, the interests of the creditors are better served by the appointment of an Administrator.
- What are the powers of an Administrator in Gibraltar?
The Administrator takes custody and control of all the company’s assets and he will manage the business affairs of the company in furtherance of the objectives. The Administrator will perform his duties with the main objective of rescuing the company if such an outcome is possible.
- What are the powers of Directors when an Administrator is appointed to a Gibraltar Company?
The Directors continue to discharge their responsibilities and retain their powers as long as they do not conflict with the powers of the Administrator, who manages the company’s business.
- What is a Moratorium period in the context of Gibraltar Insolvency?
A moratorium period is the period of time between the filing of an application for an Administration Order until either the dismissal of the application or the discharge of the Administration order, during which time the company is protected from any creditor’s action, save for with leave of the Court.
- Can a receiver be appointed in respect of a Gibraltar Company?
Yes – the Insolvency Act provides for the appointment of a receiver of a Gibraltar company either further to an order of the Supreme Court on application or by operation of the provisions of a debenture or other instrument.
- What is the difference between a receiver and an administrative receiver in Gibraltar insolvency law?
While a receiver is generally appointed in respect of a particular asset, an administrative receiver is appointed in respect of the whole, or substantially the whole of the assets of the company and may be appointed by a floating charge holder or by the Supreme Court. The powers of the Administrative Receiver extends to execution of company documents and use of the company seal.
- How is a liquidator appointed in respect of a Gibraltar company?
An application for the appointment of a liquidator (an application which was previously known as a petition for the winding up of a company) can be made under s.150 of the Insolvency Act, by the company, a creditor, a member, the directors, the Minister under s.152, the Gibraltar Financial Services Commission under s.153, the administrator where relevant or the administrative receiver of the company.
- What are the benefits of Insolvency in Gibraltar?
Gibraltar is a fully-autonomous British overseas territory and, as such, it has a legal system based on English common law but is also self-governing. From the standpoint of parties based in the UK involved in an insolvency case in Gibraltar, there is a distinct similarity to the proceedings. Plus, although Gibraltar exited the EU alongside the UK in February 2020, it nonetheless enjoys legal harmonisation with the EU and other key jurisdictions within Europe and other key jurisdictions. Therefore, Gibraltar has the considerable advantage of being able to provide relatively swift and simple resolutions to a wide range of cross-border insolvency proceedings
For over 80 years Hassans has worked to develop intimate working relationships with businesses both local and international. Our top-ranked team of commercial lawyers, the largest such team in Gibraltar, have acted in numerous high-profile insolvency cases over the years, with a proven track record for delivering swift and equitable results. We have helped insolvent companies and individuals restructure their debt in order to weather difficult business conditions as well as helping creditors successfully recover monies owed. In terms of experience and in-house expertise, no other firm comes close.
Insolvency matters can be difficult, but need not be unnecessarily painful. Our highly experienced team are on hand to ensure things run as swiftly and as smooth as possible to ensure the best results – contact us today to find out more or email us directly on email@example.com
A few weeks ago I was asked to share my thoughts on the challenges and opportunities for Gibraltar in 2021. My thoughts would eventually be published in the Spring edition […]
Whilst on one level Salesforce’s purchase of messaging app Slack may represent a welcome example of economic activity in challenging times, there are those who see it as a manifestation […]
The introduction of the Insolvency (Amendment) Act 2020 (“the Act”) creates a significant problem for creditors of insolvent or potentially insolvent companies. It is designed to protect companies and their […]
Avid writer, historian and lawyer, Nigel Feetham QC, was cited in Gibraltar Parliament last month in relation to his article “The new normal or new dawn – amendments to the […]