Two recent developments may have rendered the Irish legal system less attractive to creditors. We examine the scope of these developments and the likely impact on debt collection activity in Ireland.

Rate of interest of judgment debts falls by 6%

The rate of interest on judgment debts has been reduced from 8% to 2%, with effect from 1 January 2017, in accordance with the Courts Act 1981 (Interest on Judgment Debts) Order 2016 (S.I. No 624 of 2016) (the “Order”).

We examine the scope of the Pensions (Amendment) (No. 2) Bill 2017 and look at the potential impact on defined benefit pension schemes in Ireland, if enacted.

On November 17, 2016, the Third Circuit Court of Appeals issued an opinion holding that claims for “make-whole” amounts were valid and enforceable as “redemption premiums” under New York law despite the automatic acceleration of the underlying debt upon the issuer filing for chapter 11 bankruptcy protection. See In re Energy Future Holdings Corp., No. 16-1351 (3d Cir. Nov. 17, 2016) (the “EFH Decision”).

Until recently, Irish creditors could reasonably assume that money judgments awarded in Ireland could be enforced within all other EU member states, including the UK[1]. This gave Irish creditors comfort that they could swiftly and cost-effectively pursue UK-situate assets of a judgment debtor, after a judgement was obtained in Ireland.

In our previous two news alerts,1 we examined decisions that potentially undermine key elements of the legal structures that lenders created in response to their experiences in the United States Bankruptcy Courts during the real estate downturn of 1988 through 1992, including the involuntary restructure of their indebtedness and liens under the cram-down provisions of title 11 of the United States Code (the “Bankruptcy Codeâ€).

Simple retention of title clauses are commonplace and generally effective in contracts for the sale of goods. However, extending their effect to the proceeds of sale of such goods requires careful drafting.

The Court of Appeal has provided some further clarity around the creation and effects of fiduciary obligations in relation to such clauses.[1]

Proceeds of sale clauses

A recent Court of Appeal decision in the UK has ruled that individuals facing bankruptcy cannot be forced to hand over their pensions to pay off outstanding debts. We examine the affect insolvency can have on your pension in this jurisdiction.

The recent UK Court of Appeal decision in Horton v Henry ruled that there was no requirement to draw down funds held in a pension in the event of bankruptcy. As a result of this decision, the UK legal system now appears to acknowledge that pension funds should be out of the reach of a bankruptcy trustee.

The Residential Tenancies (Amendment) Act 2015 has undoubtedly strengthened the position of tenants and increased the responsibilities and challenges facing receivers appointed by secured lenders over residential investment properties. While the added protections for tenants are to be welcomed, certain provisions of the Act result in relatively onerous obligations on receivers who are already faced with practical difficulties when seeking to deal with and realise the secured asset in accordance with their duties.

As a service to energy industry participants, the lawyers of the Oilfield Services and Bankruptcy Practices at Haynes and Boone, LLP have been tracking and reporting industry developments in oilfield service restructurings. Our research includes details on 100 bankruptcies filed since the beginning of 2015, including secured and unsecured debt totals for each case. The total amount of aggregate debt administered in oilfield services bankruptcy cases in 2015- 2016 is more than $14 billion and the average debt of these cases exceeds $144 million.

As we head into a new Legal Year, we examine recent trends in debt recovery litigation. The Courts Service 2015 Annual Report noted, in the words of Chief Justice Ms. Susan Denham, “another busy year for the courts”. Indeed, the courts received 248,254 new civil cases in 2015, a very marginal decrease from the corresponding 2014 figure.

Default judgments