The Minister for Justice and Equality has published details of a proposed Personal Insolvency Bill.   It is expected that the Bill itself will be published on 30 April 2012 when further details will then be available. The Minister has invited comment from any interested parties on the General Scheme of the Bill. The proposed Bill would provide for the establishment of an Insolvency Service to incorporate the new non-judicial insolvency arrangements. The new non-judicial debt settlement system would operate subject to certain conditions.  These would include:

In Re: Michael McLoughlin Pharmacy Ltd. The examiner sought the High Court’s approval for a scheme of arrangement which limited his liability for negligence. The secured creditor objected as a matter of principle because such limitations of liability had become commonplace in schemes. The secured creditor made it clear that there was no suggestion of any negligence by the examiner in the particular case.

The court considered:

In an insolvent winding up, preferential creditors are entitled to be paid first from assets subject to a charge which at the time of creation was floating, regardless of whether the floating charge has crystallised at the commencement of the winding up.

In a series of cases the High Court has:

In January 2010 an interim examiner was appointed to Missford Limited, which operated the Residence Club, a private members club in St. Stephen’s Green.

In a written judgment on the costs and expenses of the interim examiner, the court held that the interim examiner “simply did more with the best of motives than his warrant permitted”. The court proceeded to refuse the interim examiner’s application for remuneration in respect of any work carried out in excess of his statutory powers.

In the matter of Cognotec Ltd (in receivership)

Section 60(14) provides that a transaction in breach of section 60 is voidable against any person who had notice of the facts which constitute the breach.

The company sought to void the debenture which secured the loan on the basis that section 60 had not been complied with and the receiver appointed on foot of the debenture brought a motion for directions.

The court held that:

Overview

In the recent High Court decision of McInerney Homes Limited, the court has ruled for the first time that proposals for a scheme of arrangement (the “Scheme”) entailing payment to a secured creditor of a written down sum in full satisfaction of its debt, could be approved. However, on the facts of the case the court held that the objecting secured creditors would be unfairly prejudiced if they were required to accept the sum proposed to be paid, and, accordingly, refused to approve the Scheme.

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).

The continuing harsh economic conditions see more and more businesses going into examinership. Examinership has serious implications for landlords.

Toward the end of 2009 the Republic of Ireland’s then government passed legislation which would lead to the creation of the National Assets Management Agency (NAMA). The role of NAMA was a simple one: to remove toxic debt from the books of the Irish banks to assist in attempts to revive the national economy. The security would be acquired at a discount and purchased with Government backed bonds. In the first phase of NAMA (focusing on mortgages and other secured facilities with a minimum value of £20m) over £80bn in toxic debts were acquired.

On 25 March 2011 the High Court delivered a judgment concluding that a notice of crystallisation served by a bank (who held fixed and floating charges) on three corporate borrowers shortly before they were placed into liquidation did not alter the order of priorities.