Liquidators will welcome the recent decision of the Director of Corporate Enforcement to reduce their reporting requirement in cases where a decision has been definitively made either to relieve or not relieve them of their statutory obligation to take restriction proceedings against a company's directors.

By order dated 20 January 2009, the Supreme Court, in the first case on examinership to come before it in over 10 years, allowed an appeal against the order of the High Court dated 13 January 2009 (McGovern J) which refused the petition of Gallium Limited (trading as the First Equity Group) (under the protection of the Court) for the appointment of an examiner and appointed Mr Kieran Wallace of KPMG as examiner of the Company. The Supreme Court delivered its reasoned judgment on 3 February 2009.  

These are hard times for business. In an era of falling asset values and tight trading conditions, some firms may be facing paper losses or technical insolvency. In the fight for survival, applying for examinership is one way they can avoid being forced into a 'fire sale' of their assets. But, as Andrew Gill explains, timing is critical.

Supreme Court Judgment (ex tempore), 20 February 2009

A return of no goods (nulla bona) no longer required for issue of bankruptcy summons

A decision of the High Court, affirming a rule of practice which required a return of no goods (or a good reason for the absence of same) before it would issue a bankruptcy summons to a creditor, has been successfully appealed to the Supreme Court.  

BACKGROUND

The Companies (Amendment) Act 1990 (the 1990 Act) provides the statutory framework for petitioning the High Court for the appointment of an examiner to a company and providing the company concerned with a certain level of protection from its creditors. In practice, a significant issue which often arises is the enforceability of the provisions of a guarantee in the context of an examinership. The purpose of this article is briefly to look at the enforceability of a guarantee both during the period of protection and once it ends.  

DURING THE EXAMINERSHIP

As we are all well aware, there has been a major slowdown in economic activity in Ireland with many businesses now facing an uncertain future. A combination of factors has led to a tightening of purse strings which has placed many businesses under severe financial pressure.

Recent attempts by the Zoe Group to seek court protection have raised the profile of examinerships. The main legal test to enter the process is: does the company have a reasonable prospect of survival. But what are the key ingredients for a successful examinership?

Supreme Court clarifies law in relation to repudiation of leases (Re Linen Supply Ireland Ltd, 10 December 2009)

The Supreme Court has recently clarified the law in relation to a company’s ability to repudiate/disclaim leases during the course of an examinership. Recent decisions of the High Court, including the O’Brien’s Sandwich Bar decision had created uncertainty in this area.

Last week the Supreme Court overturned Mr Justice McGovern's recent decision in the Linen Supply of Ireland examinership that the current legislation does not permit the repudiation of leases in an examinership. The case has now been remitted back to the High Court to consider whether, in the specific case before it, the leases ought to be repudiated in order for a scheme of arrangement to be formulated.

The Dáil Public Accounts Committee has issued a report which primarily examined the loss of "Fiduciary" taxes (such as PRSI and PAYE) arising from company insolvency. The Committee concluded that there is a need in Ireland to introduce further measures to reduce the amount of Fiduciary taxes that are lost due to the irresponsible behaviour of directors. There is a need, according to the report, for the introduction of a deterrent which will make directors aware of the negative consequences which could arise for them if they wilfully evade paying the company taxes that are due.