Insolvency

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.

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.

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.

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.

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.

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.

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.

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.

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.

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