On 30 November the Supreme Court delivered its written judgment dealing with the correct test for insolvency when considering the eligibility of a debtor for a Personal Insolvency Arrangement (PIA) under the Personal Insolvency Act 2012 (as amended).

Background

One of the qualifying criteria for a PIA is that the debtor must demonstrate that the debtor is “insolvent” within the meaning of section 2(1) of the Personal Insolvency Act 2012. That provision defines the term as meaning “that the debtor is unable to pay his or her debts in full as they fall due”.

While the economy continues to look positive on paper, the underlying issues stemming from recent inflation and ever increasing overheads continue to affect businesses. Against this backdrop and a year on from the commencement of the European Union (Preventive Restructuring) Regulations 2022 (SI 380/2022) (“the 2022 Regulations”) on 29 July 2022, it seems auspicious to remind directors of their duties to wind up a company in a timely manner or simply exercise good corporate governance and wind up companies that are no longer operational.

The High Court has delivered its written judgment on a recent decision that was the first of its kind by appointing an examiner to a company registered outside of the State, as it was established that its centre of main interests was in the Republic of Ireland.

Changes have been introduced to the current Irish examinership regime with effect from 29 July 2022 when the European Union (Preventive Restructuring) Regulations 2022 (the “Regulations”) transposed into Irish Law certain mandatory articles of the European Union Preventive Restructuring Directive (EU Directive 2019/1023) (the “Directive”) that relate to corporate insolvency.

The Department of Enterprise, Trade and Employment has published the General Scheme of the Companies (Small Company Administrative Rescue Process and Miscellaneous Provisions) Bill 2021. The General Scheme of the Bill amends the Companies Act 2014 to provide for a rescue process specifically designed for small and micro enterprises known as the Small Company Administrative Rescue Process (“SCARP”). Up to 98% of companies fall within the definition of small and micro enterprises and thus have the option to avail of the process where the eligibility criteria are met.

Yesterday, the Department of Enterprise, Trade and Employment announced that the Government has approved the extension until 31 December 2021 of the period during which the interim measures introduced under the Companies (Miscellaneous Provisions) (Covid-19) Act 2020 (the 2020 Act) (link to announcement here) will apply.

This article was originally published in Law360. Any opinions in this article are not those of Winston & Strawn or its clients. The opinions in this article are the authors' opinions only.

In Pension Benefit Guaranty Corp. v. 50509 Marine LLC et al.[1] the U.S. Court of Appeals for the Eleventh Circuit held that the Pension Benefit Guaranty Corp. can recover an employer's defined benefit pension plan termination liability--often millions of dollars--from controlled group members that did not even exist when the contributing employer liquidated years earlier.[2]

In In re Nine West LBO Securities Litigation (Case No. 20-2941) (S.D.N.Y. Dec. 4, 2020), a federal district court denied in part a motion to dismiss claims brought by the Nine West liquidating trustee against former directors (the "Defendants") of The Jones Group, Inc. (the "Company"), Nine West's predecessor, for, among other things, (i) breaches of their fiduciary duties of care and loyalty, and (ii) aiding and abetting breaches of fiduciary duties. The litigation arises from the 2014 LBO of the Company by a private equity sponsor ("Buyer").

The Irish Government continues to prepare for the consequences of the UK withdrawal from the EU through the enactment of recent legislation.

In the wake of the recent economic downturn caused by the COVID-19 pandemic, there will likely be a sharp rise in bankruptcy filings by businesses seeking to obtain relief from the burdens of excessive debt.^[1] The bankruptcy code is designed to provide debtors relief and protection from creditors, which includes the Internal Revenue Service (“IRS”).