Jersey's new bankruptcy law provides greater certainty to parties of structured finance transactions that will help the island maintain its position as one of the top European jurisdictions for capital markets structuring.
Transactions structured in Jersey typically contain agreements to not take action in having another party to the transaction declared insolvent (a so-called "non-petition agreement"). The agreements allow a number of ancillary mechanisms and arrangements designed to implement the close-out netting. The parties to these transactions invariably seek legal opinions to confirm that all agreements containing such provisions would be enforced by the Jersey courts in the event of the insolvency of any of the parties - which typically translates to several pages of technical jargon. "Before August 2005 Jersey did not have any legislation which directly confirmed the enforceability of such matters," explained Ian James, chairman of Mourant and structured finance specialist, in a commentary on the new law.