Ben Rhodes is a Director at Grant Thornton, Channel Islands. He is a Chartered Accountant, UK Licensed Insolvency Practitioner, Certified Fraud Examiner and qualified Trust and Estates Practitioner. He has specialised in the areas of restructuring, insolvency and forensic investigations since 2003, helping company directors, creditors and other stakeholders. He began his career in London before moving to the Channel Islands in 2012.
Grant Thornton has the largest single dedicated recovery and reorganisation practice in the Channel Islands, with three UK Licensed Insolvency Practitioners supported by a team of experienced accountants and fraud examiners. Here Ben tells Finance Monthly more about the insolvency and restructuring processes in the Channel Islands and specifically Guernsey, as well as what makes him a thought leader in the sector.
What are currently the hottest topics being discussed in relation to insolvency and restructuring trends in the Channel Islands?
The concept of “Insolvent Trusts” has gained much attention in the Channel Islands in the last couple of years and remains a hot topic now.
It is debatable whether a Trust can become “insolvent”, as it does not have its own separate legal personality. However, a Jersey ruling in 2015 in Re Z Trust has helped provide clarification. This matter concerned a Trust that had insufficient assets to meet its liabilities, as they fell due and was therefore insolvent on a cash-flow basis. The Court recognised that it was incorrect to describe the Trust as “insolvent”, however acknowledged that the terminology was helpful in ascertaining how the Trust should be treated and the duties of the Trustee.
The Z Trust ruling is helpful, however there remain problems to be overcome. There is no insolvency regime in place in respect of Trusts and therefore, no clear remedy for creditors and other stakeholders. This lack of regime results in additional cost. Furthermore, there is difficulty finding a replacement for the incumbent Trustee in these situations.
Which sectors would you say are faced with insolvency and restructuring proceedings more than others in Guernsey?
As expected of an International Finance Centre, we deal with a significant volume of solvent restructuring matters in relation to Trust and Fund structures in Guernsey. These structures have typically come to the end of their useful life and are therefore being wound down. The structures often include entities in various jurisdictions such as Luxembourg, Cayman, BVI and Bahamas, as well as the UK and therefore, we work closely with our international Grant Thornton colleagues. We also work very closely with our tax colleagues in relation to these matters as decisions are often driven by tax considerations.
Do you see any need for legislative change regarding insolvency in Guernsey?
Guernsey is currently embarking on a reform of its commercial and personal insolvency legislation. I was engaged in 2016 by the States of Guernsey to assist with the changes and to provide recommendations on the proposed law reform.
The first phase of the reform is anticipated to include the introduction of insolvency rules; a requirement for independent office holders in an insolvent voluntary winding up; greater consultation with creditors in an insolvent winding up; and greater powers for office holders to obtain information from directors and officers.
These changes will make the insolvency regime far more robust and will enhance Guernsey’s reputation as a safe place to do business.
You have worked on numerous high profile cases in the Channel Islands and the UK – what has been your flagship piece of work in recent years and how did you apply particular thought leadership to this scenario? (94)
We continue to be busy with regulatory and insolvency investigations in the Channel Islands. Our clients may include Trust or underlying entities that have been the victim of fraud; or beneficiaries and investors seeking compensation.
Our forensic investigation work may include isolating and quantifying the fraud, interviewing suspects and witnesses, gathering and preserving digital and other evidence and working with the legal teams to pursue prosecution.
Our in-house Business Advisory and Compliance teams also assist clients with putting processes and safeguards in place to reduce the risk of fraud occurring in the first place.
As a thought leader in this segment, how are you developing new strategies and ways to help your clients?
As a member of the Association of Restructuring and Insolvency Experts (ARIES) Legal and Regulatory Committee, I have been assisting with the implementation of Guernsey Insolvency Practice Statements (GIPS). These will help to provide best practice guidance to practitioners in Guernsey, in advance of the law reform. The GIPS will cover such practical areas as conducting investigations, reporting on director conduct, the holding of creditors’ meetings and pre-packaged sales of business through Administration.
The GIPS are expected to be released within the following two months. ARIES has also begun drafting Jersey Insolvency Practice Statements (JIPS) to offer similar guidance to Jersey practitioners.