“To achieve great things, two things are needed: a plan, and not quite enough time.” – Leonard Bernstein

To paraphrase, great things happen when there is a plan and a deadline.

Examinership is one of Ireland’s key rescue processes for insolvent companies. It has been used successfully in very many cases since its introduction almost 20 years ago.

Crucially, it encompasses a deadline with no flexibility.

100 days

Less than an hour after an oxygen tank exploded on Apollo 13, mission control told the crew to isolate a small tank, containing 3.9 pounds of oxygen.^[1] Days later, that tank provided the oxygen to keep the crew alive while landing back on Earth.

If they had left that tank for even another hour the oxygen in it would have been almost gone.

The appointment of a receiver by way of equitable execution has generally been considered a “remedy of last resort”[1] and, for over a hundred years, courts have expressed differing views as to when they could appoint such a receiver.

The Land and Conveyancing Law Reform (Amendment) Bill 2019 (the “Bill”) proposes to broaden the factors that the courts can consider in refusing orders for possession sought by lenders.

The Bill has its roots in the Keeping People in their Homes Bill, 2018, introduced by Kevin “Boxer” Moran T.D., as a private member’s bill. However, the Bill does not go as far as Mr Moran’s bill and, for instance, does not require disclosure of the price paid by a purchaser of the loan.

Background

No. The Court of Appeal upheld the High Court’s original finding, namely that no duty to consider AWA’s creditors had arisen. Whilst AWA’s directors had made provision for the contingent liabilities in question, this did not itself mean AWA was insolvent or close to insolvency. In fact, it was not, and so the duty to consider AWA’s creditors never arose.

Practical implications

Although this decision simply confirms the High Court’s original decision, it emphasises the care and vigilance with which directors of a company need to act when paying dividends.

Court confirms dividends can be transactions at an undervalue

The Court of Appeal has confirmed that a dividend paid by a company to its shareholders can constitute a transaction at an undervalue under insolvency law.

What happened?

At the initial hearing, the High Court found the dividend was caught by section 423 and was therefore invalid. Importantly, it said that a dividend could constitute a transaction at an undervalue. This was an important confirmation, and the High Court has since followed this approach (for example, in Dickinson v NAL Realisations (Staffordshire) Ltd).

Overall 2018 has produced a number of positive judgments from the perspective of lenders and insolvency practitioners.

In particular, the courts delivered many useful judgments disposing of numerous challenges to the enforceability of loans and security and, also, restricting abuse of the courts’ processes.

Contemptuous McKenzie Friends

The court has decided to allow a shareholder to pursue a derivative claim on behalf of a company that was placed into a pre-pack administration.

What happened?

Montgold Capital LLP v Ilska and others involved a restaurant company which was placed into a “pre-pack” administration, under which its entire business was sold, in late 2016.

Must the legal owner of securitised debt and related security disclose in proceedings it brings that it is a bare trustee for the beneficial owner? In addition, is that trustee obliged to join the beneficial owner as a party to those proceedings?