Chapter 11 plans commonly protect a debtor’s key stakeholders that participate in the chapter 11 process from claims arising in connection with the bankruptcy case. The Office of the United States Trustee (the “US Trustee”), the branch of the Department of Justice tasked with monitoring bankruptcy cases, has recently taken aim at limiting the use and scope of these “exculpation” provisions in large restructuring cases across the country.

Background and Standards

While examinership is a successful and internationally recognised rescue process for Irish companies, there has been a concern for some time that is out of reach of smaller businesses due to the associated costs. As part of the government’s response to the economic challenges of the pandemic, the Department of Enterprise has published a rescue process for small and micro businesses.

On April 19, 2021, the United States Supreme Court denied a petition for certiorari from the Second Circuit’s decision in In re Tribune Company Fraudulent Conveyance Litigation (“Tribune II”),[1] leaving intact the Second Circuit’s decision upholding the safe harbor defense to avoidance actions und

“The discharge of claims in bankruptcy applies with no less force to claims that are meritorious, sympathetic, or diligently pursued. Though the result may chafe one’s innate sense of fairness, not all unfairness represents a violation of due process.”

On March 19, 2021, the United States Court of Appeals for the Third Circuit issued a unanimous decision[1] affirming that the mutuality requirement of section 553(a) of the Bankruptcy Code must be strictly construed and, therefore, that triangular setoffs are not permissible in bankruptcy.

The High Court has recently brought welcome clarity to how pensions are dealt with in the event of a bankruptcy, in the case of Lehane –v- Wealth Options and Brian O'Neill.

While the recent Brexit trade deal contains various provisions for the conduct of trade in the post-Brexit era, it does not provide clarification for new cross-border insolvency proceedings involving the United Kingdom.

However, the Withdrawal Agreement which came into force on 1 February 2020 and established the terms of the UK's withdrawal from the European Union, does provide some comfort for insolvency practitioners, but only where insolvency proceedings were opened prior to the end of the Brexit transition period.

With the possibility of a no-deal Brexit looming large, the implications for Irish insolvency practitioners is something we will all have to consider. The insolvency landscape will most likely look very different when we all return to the office after Christmas. This is a discussion on some of the possible implications for Irish and UK insolvency practitioners post-Brexit.

Current Regime

The Data Protection Commission ("the DPC") has issued useful guidelines for receivers in the context of data protection.

Once a receiver is appointed, they will have access to borrowers' personal data such as the address of the property put into receivership and certain details concerning the borrowers.

The main points of the DPC's guidance are as follows:

We will soon enter a phase of the Covid19 era when more and more companies will be forced to apply for protection from their creditors under the Examinership provisions of the Companies Act, 2014. Security as always will be a key consideration for the stakeholders in this restructuring process. Fixed and floating charges are almost always well protected but what about personal or corporate guarantees?

The legislation

The legislation is very specific regarding guarantees.