The scheme of arrangement (Rescue Plan) prepared by the examiner of Mac Interiors Limited (Company) has not been approved by the High Court following strong objections from the Revenue Commissioners (Revenue).
In its challenge, Revenue argued that there had been an error in “class composition” or, in other words, an error in the classification of creditors that voted on the Rescue Plan.
Class Composition
With effect from 9 May 2022, a new Order 74C of the Rules of the Superior Courts came into operation. Order 74C facilitates the operation of the Companies (Rescue Process for Small and Micro Companies) Act 2021, which inserted a new Part 10A into the Companies Act 2014 (Part 10A).
The Companies (Rescue Process for Small and Micro Companies) Bill 2021 (Bill) detailing the government's proposed rescue process for small and micro companies (SCARP) has successfully passed through the Oireachtas and is expected to be signed into law shortly by the President. The legislation will be commenced at a future date by the Minister.
The Department of Enterprise, Trade and Employment has published the outline of proposed legislation for a dedicated rescue and restructuring framework for insolvent or potentially insolvent small and micro companies – see here.
Over the past year, the Covid-19 pandemic upended many industries. While the construction industry has largely been able to operate throughout the pandemic, albeit with increased and ever-changing restrictions on jobsites, one consequence of these disruptions may be an increase in construction-related bankruptcy filings. Already in 2021, there have been over 70 construction-related bankruptcy filings across the country. For many property owners and real estate developers, these filings create a nightmare scenario where work may slow or even stop entirely.
Examinership A number of significant decisions were made by the High Court and Court of Appeal relating to different aspects of the examinership process in 2017. |
Congil Construction Limited & Companies Acts: Mannion -v- Connolly & Anor [2013] IEHC 544
On the 28 November 2013 the High Court restricted two directors of an insolvent construction company, Congil Construction Limited, for a period of five years.
The High Court has granted a creditor’s petition to wind-up a company, notwithstanding the claim that the company could survive as a “going concern” following a restructuring, on the grounds that such a claim should have been advanced by way of application for examinership: In re Heatsolve Ltd [2013] IEHC 399.
Legislation enabling the immediate liquidation of IBRC (formerly Anglo Irish Bank) was signed into law in the early hours of 7 February. Draft legislation was published on 6 February following media speculation that the Irish Government was preparing plans to liquidate IBRC and was promptly brought before both Houses of the Oireachtas (the Irish Parliament). The Minister for Finance stated that immediate action was necessary in order to prevent any action being taken which could have put IBRC’s assets at risk.
In general, a company has two bankruptcy alternatives: liquidation under Chapter 7 and reorganization under Chapter 11.
Under Chapter 7, upon the filing of a bankruptcy petition, a trustee is appointed to gather and sell all of the debtor’s assets as quickly as possible. Once the trustee liquidates all of the assets, it must pay creditors in accordance with the priority scheme mandated by the Bankruptcy Code: