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:
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.
We are delighted to publish the latest edition of our newsletter, Compliance Agenda. It contains a round-up of all the latest legal updates of interest to Company Secretaries, Company Directors and Compliance Officers.
Involuntarily struck off, can I bring my company back to life?
The Bankruptcy (Amendment) Act 2015 reduced the normal duration of bankruptcy from three years to one year. Up until December 2013 the standard period had been twelve years - so the reduction was a fundamental change and it was seen as a very "pro-debtor" reform of law, which was also aimed at reducing "bankruptcy tourism".
Extending the Period of Bankruptcy
The Companies Registration Office (CRO) will no longer change the designated status of a company on the register of companies from “Normal” to “Receivership” if that company has a receiver appointed over its assets.
This means that companies in receivership will no longer have the designation “Receivership” on their CRO record.
This change, which became effective on 22 March 2017, is a consequence of the Court of Appeal decision in Independent Trustee Company Limited v Registrar of Companies [2016] IECA 274.
As well as representing new possibilities in the context of acquisitions, the new merger regime under the Companies Act 2014 (the Act) offers a number of benefits which make it attractive to corporates seeking to restructure.
The Act provides for the following three forms of statutory merger between private companies:
Finds Bankruptcy Court to be Proper Forum for Claim Objection Despite Forum Selection Clauses in Investor Agreements
The Southern District of New York recently reiterated the critical difference between creditor claims and equity interests in the bankruptcy context. In a recent opinion arising out of the Arcapita Bank bankruptcy case, the Court was faced with an objection to a proof of claim filed by an investor, Captain Hani Alsohaibi, who characterized his right to recovery against the debtors as being based on a “corporate investment.”
On June 4, 2014, the New York Court of Appeals will hear arguments arising from the bankruptcies of two law firms—Thelen and Coudert Brothers—as to whether the former partners of the bankrupt law firms must turn over profits earned on billable-hour client matters they brought to their new firms.
Following recall notices for its ignition switches in February 2014, General Motors, LLC (“New GM”) has been hit with at least 50 class actions and two individual suits in not less than 20 federal and two state courts asserting claims against New GM for defective vehicles and parts sold by Motors Liquidation Company, formerly known as General Motors Corporation (“Old GM”).
On April 17, 2014, the United States Bankruptcy Judge Sean H. Lane issued an opinion in the Waterford Wedgwood bankruptcy discussing at length one of the defenses available to preference defendants. The opinion turns upon the scope of “ordinary business terms,” the objective prong of the ordinary course of business defense.