The High Court has reaffirmed the test to be applied in considering an application to dismiss a bankruptcy summons grounded on a judgment.

The bankruptcy process in Ireland involves multiple steps and the debtor can seek to bring it to a halt at each step. Debtors often seek to rerun effectively the same arguments at each step, ignoring previous findings by the courts. One such step is an application to dismiss a bankruptcy summons.

The Irish High Court has determined that the liquidation of an Irish aircraft leasing company, which was a 100% subsidiary of a Russian company expressly subject to EU sanctions, rebuts the presumption that the company was controlled by the Russian parent for the purpose of EU sanctions.

This enables the liquidators to deal with the assets without costly and time-consuming derogation applications.

Background

In figures released on Friday 28 July 2023 from the Insolvency Service, the total number of registered company insolvencies in England and Wales during Q2 2023 was 6,342, the highest since Q2 2009 and up by 9% compared to Q1 2023. The construction industry was again the hardest hit (a trend going back over a decade). Whilst more construction companies went into administration during Q2 compared to Q1, significantly higher numbers went quietly into liquidation during the same period, at an average rate of around 11 per day.

The construction industry trade press frequently writes about administrations in the industry. Whilst the Insolvency Service's figures show that around one construction company went into administration every other day in Q1 2023, significantly higher numbers went quietly into liquidation during the same period.

Each week we are seeing stories in the news about construction companies becoming "insolvent", going into "liquidation" or having "administrators" appointed. But what do these terms mean? Insolvency is a complex area of law with its own terminology, so we've broken down what all the terms mean below.

What is insolvency and what happens to a company when it is insolvent?

Irish company law provides that if a charge granted by a company is not registered in the Companies Registration Office (CRO) within 21 days of its creation, it is void against a liquidator and any creditor of the company. There is a duty imposed on a company which grants a charge to register the charge in the CRO but the creditor taking the charge can also do so.

Diamond Rock Developments Ltd (the Company) granted a mortgage over a property. That mortgage was registered in the Land Registry but was not registered in the CRO.

If you supply goods, the simplest step that you can take to reduce your exposure to a customer’s insolvency is to use effective retention of title (RoT).

However not all RoT clauses are effective and we see many RoT claims rejected in insolvency.

By default, once you sell goods on credit:

• the goods belong to the customer; and
• the customer owes you the purchase price.

This means that if an insolvency practitioner (IP) is appointed to the customer:

Further to our previous article, which can be found here, we consider the key issues with which the Court faced, the technical legal analysis underpinning this judgment and our view on what this may mean for energy suppliers, and the sector as a whole, looking forward.

Background - what was the application and why was it needed?

Corporate insolvency numbers continued to appear artificially low in 2022. The expectation is that they will rise once businesses need to deal with the aftermath of Government pandemic supports and, in particular, start to pay warehoused taxes.

The long, long awaited Supreme Court Judgment in the Sequana case is finally here. Firstly, for those who may have forgotten what the Supreme Court was grappling with, the issue was 'whether the trigger for the directors’ duty to consider creditors is merely a real risk of, as opposed to a probability of or close proximity to, insolvency'.