Appleby acted as lead counsel to international banking group Standard Chartered in connection with the consolidation in September 2013 of its two Jersey banking entities (Standard Chartered (Jersey) Limited and Standard Chartered Bank, Jersey branch) into a single operating platform for its Jersey business.
The transaction was ground-breaking in its use of the Banking Business (Jersey) Law 1991 (Banking Law) which allows Jersey banking business (technically deposit-taking business), to be transferred from one bank to another by means of a court-sanctioned scheme. In this case the Court confirmed its jurisdiction to transfer investment business alongside banking business under the scheme, despite the lack of clear permissive wording in the Banking Law.
The Court has now issued a further judgment following the sanctions hearing. The judgment contains helpful guidance on the principles to be applied by the Court when considering an application to sanction a scheme given the lack of statutory guidance in Jersey and in the equivalent English laws. In the absence of Jersey authorities, the Court considered Re AXA Equity and Law Life Assurance Society and AXA Sun Life Plc  1 All ER (Comm) 1010, noting that it had been transposed by the Royal Court into the Jersey context for long term insurance business transfers. In summary following that case the principles to be applied include:
- the absolute discretion of the Court must be exercised by giving due recognition to the commercial judgment entrusted by the companies' constitution to its directors;
- the Court is concerned whether an interested party or group (including customers, employees and creditors) will be adversely affected by the scheme;
- the Court will pay close attention to the views of the regulator;
- the scheme, whilst being fair, does not have to be the best possible scheme in the Court's view as that is a matter for the directors;
- the details of the scheme are not a matter for the Court provided the scheme as a whole is fair.
After satisfying itself that the required formalities under the Banking Law had been complied with (including the provision of an independent auditor's report and customer notifications), the Court in the Standard Chartered case took into consideration a number of features in assessing the fairness of the scheme including the financial standing of the transferee and the operational impact of the scheme on customers. The Court also noted that there were no objections to the scheme by customers or creditors. Taking all matters into account the Court was satisfied that the scheme was fair overall and sanctioned the scheme.
The Appleby team was led by Wendy Benjamin, Practice Group Head for the Corporate & Commercial department in Appleby's Jersey office. The Court applications were handled by Michael Cushing, Jersey Managing Partner, Litigation & Insolvency assisted by associate Davida Blackmore.
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