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.

It has been reported that Debenhams which entered administration earlier this month for the second time will be managed as a 'light touch' administration.

In this article we look at what this actually means and whether 'light touch' administration could be a useful tool for both businesses and insolvency practitioners looking to negotiate a route through the coronavirus pandemic.

On 28 March 2020, the Government proposed certain insolvency law reforms in response to the COVID-19 crisis, including a temporary suspension of wrongful trading provisions for company directors.

The measures are intended to apply retrospectively from 1 March 2020 for three months, and aim to encourage directors to continue to trade during the pandemic.

As the novel coronavirus COVID-19 continues to disrupt economic activity in Ireland businesses are reviewing their corporate structures and funding arrangements to deal with the crisis. In this article, we outline the types of corporate restructuring options that are available under Irish law each of which will be discussed by us in greater detail in a series of subsequent articles.

This is the second litigation involving the furlough scheme in the insolvency context, following on from Re Carluccio's (in administration). Please refer to our note on Carluccio's for background reading on how the furlough scheme weaves into insolvency law.

Issue

In the first litigation involving the Furlough scheme, the court in Re Carluccio's (in administration) ruled on how the administrators can lawfully give effect to furlough arrangements with the employees who have agreed to the variation of their employment contract.

Read on for our analysis of the case which gives an interesting insight into how the courts in the future might interpret the furlough scheme.

1. Background

Carluccio’s in administration

GENERAL INSOLVENCY LANDSCAPE IN GERMANY PRE-COVID-19

Without undue delay upon occurrence of illiquidity or overindebtedness, at the latest within three weeks, members of the representing body of a legal entity have to apply for the opening of insolvency proceedings over the assets of such entity

INSOLVENCY REASONS:

CORONAVIRUS RESPONSE – INTRODUCING FLEXIBILITY TO DIRECTORS' DUTIES?

IN LIGHT OF COVID-19, THE UK GOVERNMENT RECENTLY ANNOUNCED ITS INTENTION TO TEMPORARILY SUSPEND THE OFFENCE OF WRONGFUL TRADING BY DIRECTORS OF UK COMPANIES. THIS WILL INEVITABLY HAVE A WIDE-RANGING EFFECT ON BOTH DIRECTORS AND CREDITORS.

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:

Last week, the Government announced a number of measures to provide financial support to businesses struggling with the impact of COVID-19, including two new Government-backed funding schemes.

Addleshaw Goddard is monitoring those measures closely, with our latest updates found here.

Notwithstanding, it is inevitable that we will see more companies collapse over the coming months, as they struggle to cope with the indefinite business disruption.