Covid-19 is top of the agenda for businesses globally — and for good reason.
It has now been classified as a worldwide pandemic and numbers of those affected are on the rise each day. It has already had some devastating effects on the markets and now with some countries being on complete lockdown, issues such as survival of businesses and trading while potentially becoming insolvent need to be seriously considered by companies and their directors.
Some businesses may soon (and indeed already) be faced with sudden cash flow and liquidity issues as a result of the sudden economic disruption caused by the COVID-19 pandemic.
Some of these businesses may be well advised to first seek to renegotiate arrangements with creditors whilst others may require formal court protection from creditors to assist them while arrangements with creditors are being put in place.
The three main legal avenues which are available to businesses seeking to restructure their debt under Irish law are as follows:
We are delighted to publish the latest edition of our newsletter, Compliance Agenda. It contains a round-up of all the latest legal updates of interest to Company Secretaries, Company Directors and Compliance Officers.
Involuntarily struck off, can I bring my company back to life?
The Bankruptcy (Amendment) Act 2015 reduced the normal duration of bankruptcy from three years to one year. Up until December 2013 the standard period had been twelve years - so the reduction was a fundamental change and it was seen as a very "pro-debtor" reform of law, which was also aimed at reducing "bankruptcy tourism".
Extending the Period of Bankruptcy
The Companies Registration Office (CRO) will no longer change the designated status of a company on the register of companies from “Normal” to “Receivership” if that company has a receiver appointed over its assets.
This means that companies in receivership will no longer have the designation “Receivership” on their CRO record.
This change, which became effective on 22 March 2017, is a consequence of the Court of Appeal decision in Independent Trustee Company Limited v Registrar of Companies [2016] IECA 274.
As well as representing new possibilities in the context of acquisitions, the new merger regime under the Companies Act 2014 (the Act) offers a number of benefits which make it attractive to corporates seeking to restructure.
The Act provides for the following three forms of statutory merger between private companies:
There have been a number of recent cases where companies have sought a reduction in their share capital by way of a High Court sanctioned process. One such case involving Aer Lingus raised interesting issues about the status of pension fund shortfalls as liabilities of the employer company as Emmet Scully and Jennifer McGuire report.
In a reduction of capital application, the High Court’s primary concern is whether the company’s creditors would be prejudiced by the reduction of capital.
In the middle of the night back in February 2013 the Irish Bank Resolution Corporation Act 2013 (the IBRC Act) was passed by the Irish government. This Act allowed the Irish Minister for Finance to make a Special Liquidation Order winding up IBRC, being the former Anglo Irish Bank and Irish Nationwide Building Society. As a consequence of that KPMG in Dublin were appointed as Special Liquidators of IBRC.
On 9th January 2013 the National Pensions Reserve Fund (NPRF) announced the creation of three new funds to provide equity, credit and restructuring / insolvency investment in the Irish SME sector.
SME Equity Fund
As part of the IMF/EU bailout, Ireland will need to put draft legislation before the Dail to facilitate the creation of a legal framework for dealing with financial institutions on the verge of collapse. This legal framework is known as a Special Resolution Regime (SRR).