Since the beginning of the COVID-19 crisis, concerns have been raised by directors and bodies representing directors regarding potential liabilities directors may face by allowing businesses to continue to trade where there is a risk of insolvency.

In particular many directors are becoming increasingly concerned of the risks of personal liability being imposed on them if they allow their insolvent business to continue to trade in the anticipation that it will trade itself out of difficulty when the current COVID-19 crisis is behind us.

The sometimes controversial Examinership process, established in 1990, remains a very important tool for Irish companies with viable businesses that find themselves in financial difficulties.

It was established with the intention of preserving employment and benefiting the economy by facilitating corporate recovery. Examinership enables companies that successfully come through the process to do so with new investment and, hopefully, a brighter future that might not have otherwise been possible if the company had been forced into receivership or liquidation.

SJK Wholesale Limited (In Liquidation) v Companies Act 2014 [2020] IEHC 196

Introduction

In a recent decision, the Irish High Court refused to grant a liquidator access to a Google email account.

The court ruled that Irish insolvency law did not permit a court to order Google Ireland to grant the liquidator access to the email account in circumstances where the email account was created in the name of an individual rather than the company itself.

Some businesses may soon (and indeed already) be faced with sudden cash flow and liquidity issues as a result of the sudden economic disruption caused by the COVID-19 pandemic.

Some of these businesses may be well advised to first seek to renegotiate arrangements with creditors whilst others may require formal court protection from creditors to assist them while arrangements with creditors are being put in place.

The three main legal avenues which are available to businesses seeking to restructure their debt under Irish law are as follows:

As part of its economic response to the COVID-19 pandemic, yesterday the Government passed a ‘temporary safe harbour’ insolvency measure^[1].

Covid-19 is top of the agenda for businesses globally — and for good reason.

It has now been classified as a worldwide pandemic and numbers of those affected are on the rise each day. It has already had some devastating effects on the markets and now with some countries being on complete lockdown, issues such as survival of businesses and trading while potentially becoming insolvent need to be seriously considered by companies and their directors.

This article was first published in the Global Restructuring Review, 14 Jan 2020.

Australia’s corporate insolvency laws are in a process of significant change.

The latest proposed reform concerns the controversial practice of “phoenixing”. In recent months and years, phoenixing has attracted attention from a wide band of Australian regulators.

The Phoenixing Bill

A paradigm shift is underway in Australian corporate restructuring.

Bold reforms are already in force which have changed the landscape for companies, their directors, creditors and other stakeholders.

From 1 July 2018, termination and other rights against companies in administration and other restructuring-related procedures will be unenforceable under the ipso facto reform.

Regulations are expected to have significant effect on the scope of the stay – these regulations are yet to be published.

In the event of a contractual counterparty going into liquidation, whether or not a trade counterparty may claim set-off against debts owed to the insolvent counterparty can dramatically affect the commercial position of the account debtor. This was recently highlighted in the decision of Hamersley Iron Pty Ltd v Forge Group Power Pty Ltd (In Liquidation) (Receivers and Managers appointed) [2017] WASC (2 June 2017).

What does this mean for you?