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 and the Supreme Court recently confirmed a Scheme of Arrangement for SIAC Construction Limited (SCL) and certain related companies despite objections from a number of creditors. The creditors claimed that the exclusion of claims for penalties, interest and, in particular, damages not awarded by a certain date and the imposed waiver of subrogated claims was unfairly prejudicial.
Initial Confirmation Hearing
Hopes that certain severance payments paid by companies to terminated employees could escape application of the Federal Insurance Contributions Act (FICA) tax were dashed when a unanimous U.S. Supreme Court ruled on March 25th that such payments, when not tied to state unemployment benefits, were “wages,” and thus taxable. The ruling for the government will allow the IRS to disallow protective refund claims that numerous companies filed after a federal circuit court held that termination payments were not subject to FICA tax.
On March 4, 2014, a unanimous United States Supreme Court decided Law v. Siegel1 and clarified that exercising statutory or inherent powers, a bankruptcy court may not contravene specific statutory authority. Law will likely have broad implications for business bankruptcy cases even though it directly involved the exercise of a bankruptcy judge’s authority under section 105(a) to create a pragmatic solution to the actions of a bad actor in a consumer bankruptcy case.
A former director of Custom House Capital Limited (CHC) was recently found by the High Court to have fraudulently misrepresented to an investor that her €145,000 investment in the company was “safe” a year before CHC's collapse.
In March 2010 Ms Tressan Scott entered into a Subordinated Loan Agreement with CHC pursuant to which she loaned the sum of €145,000 to CHC. At the time the agreement was signed, Ms Scott was recovering from treatment for Lymphoma.
On 22 January 2014 the High Court ordered the winding up of a property company, Fuerta Limited, on the unusual ground that it was just and equitable to do so. Resort to this ground for winding up is usually reserved for the most intractable of situations and it is thought to be the first time the Court has done so on foot of a creditor petition.
On 24 December 2013 the Companies (Miscellaneous Provisions) Act 2013 was signed into law by the President. The purpose of the legislation is to expedite a number of amendments to existing legislation pending the enactment of the Companies Bill.
Circuit Court Examinership
124 members of the Element Six pension scheme are suing the trustees of the scheme in the Commercial Court for alleged breach of duty arising out of the decision to close the scheme with a significant deficit. The members claim that the trustees breached their duty to the members by failing to demand that the employer fully fund the deficit in the scheme before wind up. A number of general issues relating to the obligations of trustees were raised during the 3-week hearing of the case.
Background
A recent decision of the Second Circuit Court of Appeals has added an additional eligibility requirement for the filing of Chapter 15 cases. In Drawbridge Special Opportunities Fund LP v. Barnet (In re Barnet), ___ F.3d ___, 2013 WL 6482499 (2d Cir.
One of the effects of commercial globalization is that the bankruptcy filing of a debtor with transnational business relationships will sometimes result in a clash between the substantive bankruptcy laws of different countries. A frequent question is whether the bankruptcy laws of a foreign country should be brought to bear upon creditors located in the United States, even where foreign bankruptcy law is at odds with the laws of the United States.