As we know, the past two years have been a difficult time for many businesses and with such continuing uneconomic uncertainly, it seems there is precious little light at the end of the tunnel yet.

In this article, we consider the potential claims that might be levied at directors of an insolvent company and matters of which directors should be aware.

"Zone of insolvency”

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.

Background

The European Union (Insurance and Reinsurance) (Amendment) Regulations 2021 (2021 Regulations) will come into operation on 30 June 2021, giving effect to Directive (EU) 2019/2177 of the European Parliament and of the Council of 18 December 2019 (2019 Directive).

The 2019 Directive amends the Solvency II Directive (2009/138/EC), the MiFID II Directive (2014/65/EU) and the 4th Anti-Money Laundering Directive (2015/849/EU).

In a recent High Court decision, a provisional liquidator was ordered to pay the costs of the official liquidator (who replaced the provisional liquidator and was appointed as the new liquidator of the company) and Revenue without being entitled to have recourse to the assets of the company.

The Examinership of Norwegian Air

Key Features

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The Examinership of Norwegian Air Group Key Features

On 26 May 2021 Norwegian Air Shuttle ASA (NAS) and related companies (Norwegian Air) exited examinership in Ireland. Through the restructuring Norwegian Air:

raised NOK 6 billion (590 million) in new capital through share and hybrid debt offerings;

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.

Background

In a recent High Court decision, it was ruled that the liquidator not only failed in his application before the court, but in bringing forward an application that was 'doomed to fail', the liquidator was acting negligently and breached his duty of care to the company as liquidator. As a result, the liquidator was held personally liable for the costs of the application.

On 24 September 2020, the European Commission (the Commission) relaunched its Capital Markets Union project with the publication of its ambitious new initiative,"A Capital Markets Union for people and businesses – new action plan" (the Action Plan). The purpose of the Action Plan is to reduce the current fragmented approach in financial markets and to tackle some of the remaining barriers to a single European capital market.

The Royal Court of Guernsey has recently considered an application under the Companies (Guernsey) Law 2008 (the Law) for the Court to approve a contract for the sale of the assets of a Guernsey company in compulsory liquidation. The decision provides helpful guidance for liquidators and creditors as to the issues the Court will take into account in deciding whether to grant such approval.

Background

In a judgment delivered on 14 October 2020, the High Court, in refusing to appoint an examiner to New Look Retailers Ireland Limited (New Look Ireland) ruled that it was "entirely premature to consider the appointment of an examiner". New Look Ireland trades under the brand name "New Look" and operates across 27 stores in Ireland.