On 30 November the Supreme Court delivered its written judgment dealing with the correct test for insolvency when considering the eligibility of a debtor for a Personal Insolvency Arrangement (PIA) under the Personal Insolvency Act 2012 (as amended).

Background

One of the qualifying criteria for a PIA is that the debtor must demonstrate that the debtor is “insolvent” within the meaning of section 2(1) of the Personal Insolvency Act 2012. That provision defines the term as meaning “that the debtor is unable to pay his or her debts in full as they fall due”.

While the economy continues to look positive on paper, the underlying issues stemming from recent inflation and ever increasing overheads continue to affect businesses. Against this backdrop and a year on from the commencement of the European Union (Preventive Restructuring) Regulations 2022 (SI 380/2022) (“the 2022 Regulations”) on 29 July 2022, it seems auspicious to remind directors of their duties to wind up a company in a timely manner or simply exercise good corporate governance and wind up companies that are no longer operational.

The High Court has delivered its written judgment on a recent decision that was the first of its kind by appointing an examiner to a company registered outside of the State, as it was established that its centre of main interests was in the Republic of Ireland.

Changes have been introduced to the current Irish examinership regime with effect from 29 July 2022 when the European Union (Preventive Restructuring) Regulations 2022 (the “Regulations”) transposed into Irish Law certain mandatory articles of the European Union Preventive Restructuring Directive (EU Directive 2019/1023) (the “Directive”) that relate to corporate insolvency.

The Department of Enterprise, Trade and Employment has published the General Scheme of the Companies (Small Company Administrative Rescue Process and Miscellaneous Provisions) Bill 2021. The General Scheme of the Bill amends the Companies Act 2014 to provide for a rescue process specifically designed for small and micro enterprises known as the Small Company Administrative Rescue Process (“SCARP”). Up to 98% of companies fall within the definition of small and micro enterprises and thus have the option to avail of the process where the eligibility criteria are met.

Yesterday, the Department of Enterprise, Trade and Employment announced that the Government has approved the extension until 31 December 2021 of the period during which the interim measures introduced under the Companies (Miscellaneous Provisions) (Covid-19) Act 2020 (the 2020 Act) (link to announcement here) will apply.

In our earlier article, we discussed the importance of timing in corporate recovery efforts and the difficulties facing companies with the examinership process and its legislative requirements.

On Thursday, 4 June 2020, the Office of the Director of Corporate Enforcement (“ODCE”) published a welcome reminder on points to be taken into account when considering liquidators’ reports and the likelihood of restriction proceedings as a consequence of dishonest or irresponsible conduct.

While the ODCE considers each company’s case on its own merits taking into account:

(i) the liquidator’s report on the relevant insolvent entity; and

(ii) any other relevant information obtained independently of the liquidator, broadly speaking:

The Irish Government continues to prepare for the consequences of the UK withdrawal from the EU through the enactment of recent legislation.

In a decision of McDonald J in RESAM Cork UC & Anor v Monsoon Accessorize Ltd & Anor, Apperley Investments Ltd & Ors v Monsoon Accessorize Ltd¹, the High Court refused to recognise and enforce certain provisions of Monsoon Accessorize Limited’s ("Monsoon") Company Voluntary Arrangement implemented in the United Kingdom as they related to Irish leases on the basis that to do so would be manifestly contrary to the public policy of the State.