Guernsey Court Orders Administration For PCC

by Robin Pilgrim, LawAndTax-News.com, London

17 May 2005

In a case led by law firm Carey Olsen, a Guernsey court last week ordered what is thought to be the first administration of a protected cell company.

Carey Olsen was at the heart of a team of UK and Guernsey lawyers in a successful application to the Royal Court of Guernsey on 11 May placing Messenger Insurance PCC Limited into administration; partners from Ernst & Young LLP in London and Guernsey were appointed as administrators.

The application for administration, originally brought by the directors of Messenger, nominated the administrators of its UK-based parent company InsCom Group Limited which, along with some of its directors, is the subject of current High Court proceedings in London alleging breaches of fiduciary duty, misappropriation and fraud. The proposed nomination was strongly opposed by a number of corporate creditors of the PCC who believed the appointment would lead to conflicts of interest between the competing administrators, shareholders and directors of the two companies.

Two teams from Carey Olsen, separated by Chinese walls, spearheaded the Guernsey legal teams acting for Messenger’s creditors. John Greenfield, partner and Head of Commercial Litigation, along with senior lawyer Tim Corfield, a UK qualified Solicitor-Advocate, acted for Zurich Insurance Company, Switzerland, whilst partner Mark Dunster and Advocate Karen Le Cras acted for QBE International Insurance Limited. John Greenfield described it as the first case in the world involving an application to place a PCC into administration.

Advocate Greenfield lead the advocacy for the successful combined creditors’ teams, including lawyers from Clifford Chance LLP, Baker & McKenzie, Freshfields Bruckhaus Deringer, Barlow Lyde & Gilbert and Kendall Freeman. In preparing for the application, the lawyers from Carey Olsen were instrumental in preparing submissions based on the locus standi of creditors to be heard before the Guernsey Court in such an application, the weight to be attached to creditors’ submissions in comparison to those of the board of directors and shareholders of the PCC and in alleging conflicts of interest on the part of the proposed nominees.

John Greenfield added:

“This was a significant judgment and illustrates the strength and depth of expertise that this firm has in managing complex commercial cases, especially multi-party disputes such as this, in which a number of the major London law practices were also represented”.

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