The Employment (Collective Redundancies and Miscellaneous Provisions) Act 2024 (the “Employment Act”) was signed into law on 9 May 2024 albeit the provisions have not yet commenced. The General Scheme of Companies (Corporate Governance, Enforcement and Regulatory Provisions) Bill 2024 (the “Companies Bill”) was published in March this year and is expected to be enacted later this year. Both make significant changes to the restructuring and insolvency regime. We will continue to keep you apprised of developments regarding the commencement of the Act.

The number of company insolvencies in 2023 increased by over a third compared to 2022. The hospitality sector was particularly badly affected, with 53% more insolvencies than in 2022.

It appears that 2024 will be similarly challenging for companies in the hospitality sector. The Restaurant Association of Ireland (RAI) has set out the main challenges faced by the industry, including increased energy and labour costs, and the VAT rate reverting to 13.5% after having been reduced to 9% during the covid-19 pandemic.

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

On 11 July 2023, Mr Justice Michael Quinn delivered his judgment in the matter of Mac-Interiors Limited (High Court Record No. 2023/90 COS) (the “Company”), which confirmed and clarified ‘a significant and previously undecided point’ regarding the jurisdiction of the Irish courts to appoint an Examiner to a non-EU registered company with its centre of main interests (“COMI”) in Ireland. McCann FitzGerald act for the Company which brought the application.

On 30 May 2023, Mac-Interiors Limited (the “Company”), a private limited company incorporated and registered in Northern Ireland, but with its COMI in Ireland, presented a petition seeking the appointment of an examiner. On the same day, orders were made, amongst other things, appointing Kieran Wallace of Interpath Advisory as examiner on an interim basis pending the hearing of the Petition.

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:

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.

In both jurisdictions the general consensus was that where a company is insolvent, the fiduciary duty of its directors to act in the interest of the company (Irish law), or in the way they consider, in good faith, would be most likely to promote the success of the company in the interests of its members as a whole (English law), altered such that directors were required to treat creditors' interests in priority to shareholders' interests. Directors must consider the interests of creditors as a whole, and not just the interests of any individual creditor or class of creditors.