The High Court has held that disclosure of debts and undertakings given to the Circuit Court in seeking a protective certificate for a personal insolvency arrangement can be relied on in other proceedings.

Background

The McLaughlins were engaged in a long running saga of litigation with Bank of Scotland plc (“BOS”) and, after a loan sale, Ennis Property Finance Limited (“Ennis”).

In 2016 they issued High Court proceedings against Ennis and Tom Kavanagh (the “Plenary Proceedings”).

Dispute Resolution analysis: Deputy ICCJ Schaffer has dismissed an application brought by the Respondents to a claim brought by the Joint Liquidators of BHS Group Ltd for wrongful trading. The failure to plead the relevant quantum of the claim was not a deficiency which merited strike-out.

Re BHS Group Ltd [2021] EWHC 3501 (Ch)

What are the practical implications of this case?

Some of the UK Government’s COVID-19 supports for businesses came to an end, or started to taper off, on 30 September 2021. The UK Insolvency service published statistics yesterday showing that the number of corporate insolvencies has returned to pre-pandemic levels. There is no reason to believe that the Irish position will be substantially different when supports come to an end.

What happened when COVID-19 struck?

The recent restructuring of the Norwegian Group by the Irish High Court helpfully clarifies the application of the Cape Town Convention in Irish restructuring. It is also an interesting case study regarding the circumstances in which the Irish courts will restructure a group of companies, which is not headquartered in Ireland.

The Department of Enterprise, Trade and Employment commenced a public consultation process on 8 February 2021, in relation to proposed legislation which will allow for a new restructuring procedure for the rescue of small companies.

The High Court refused to appoint an examiner to New Look Retailers (Ireland) Ltd (New Look), where it transpired that it had sufficient funds to survive for a number of months but had not engaged substantively with creditors before applying for the appointment of an examiner.

Background

New Look operates 27 stores in Ireland, all of which are rented. It closed its stores 2 days before the Government mandated lockdown in March.

Late in the evening on 30 July, the last day before its summer break, the Irish parliament (Oireachtas) passed the Companies (Miscellaneous Provisions) (Covid-19) Bill 2020. This is likely to be signed into law and commenced within two weeks.

Three of its provisions are particularly relevant to insolvency processes during the COVID-19 crisis.

Creditors’ meetings

The Irish Government has published the General Scheme of a Bill and related secondary legislation to address practical issues that have arisen for companies and cooperative societies as a result of the Covid-19 pandemic. We examine the scope of the measures and next steps for entities that can avail of its provisions.

Duration of proposed temporary measures

For many companies facing financial stress, restructuring liabilities is the only way for their business to survive. Consensual restructuring, or voluntary workout, requires agreement from creditors to reorganise the company’s liabilities, and is typically implemented by agreement between the company and its creditors. Court-based restructuring processes, on the other hand, involve at least some degree of legal coercion of creditors to vary or release liabilities.

Notwithstanding the phased return to some level of normality, some businesses will continue to be significantly affected, particularly those in the leisure, travel/tourism, retail and hospitality sectors. These sectors will face longer term challenges due to social distancing requirements, consumer unease and the likely absence of international travel for many months, or perhaps even longer. However, these are not the only sectors that will suffer.