In brief

A recent decision by the New South Wales Court of Appeal in Buzzle Operations Pty Ltd (in liq) –v- Apple Computer Australia Pty Ltd [2011] NSWCA 109 provides useful guidance on the key aspects of shadow directorships and to what extent advices can be given by an interested party such as a financial accountant or a lender to a debtor without that interested party falling within the definition of "shadow director".

Background

On 25 March 2011 the High Court delivered a judgment concluding that a notice of crystallisation served by a bank (who held fixed and floating charges) on three corporate borrowers shortly before they were placed into liquidation did not alter the order of priorities.

On 22 February the European Council published guidelines for the rescue and restructuring of financial institutions. The objective of the initiative is to maintain a level playing field between member states granting state aid measures for the rescue and/or restructuring of a financial institution in difficulty.

The Law Reform Commission (LRC) launched its Report on Personal Debt Management and Debt Enforcement, on 16 December 2010, at its Annual Conference. The Report makes 200 recommendations for reform, and also contains a draft Personal Insolvency Bill. Reform of personal debt law must be introduced next year to comply with the Government's agreement with the International Monetary Fund and the European Central Bank.

The Irish President has signed the Credit Institutions (Stabilisation) Act 2010 (the Act) into lrish law. The Act grants far reaching and unprecedented powers to the Irish Minister for Finance to facilitate the restructuring and stabilisation of the troubled Irish banking sector.

The Central Bank is working on a proposal, agreed with the other authorities as part of the package of measures, to submit a revised re-structuring proposal in compliance with EU competition law for Anglo Irish Bank. The objective is to submit an agreement by the end of January 2011.

In this recession like no other, enforcement over complete and incomplete residential and other property developments is a common scenario faced by both bank and Insolvency Practitioner alike. The dilemma initially appears quite stark; Should the bank advance further monies to complete out developments in order to maximise realisations or sell the site "as is" to another developer but at a significantly discounted price? The purpose of this article is to consider the issues which warrant consideration before devising an enforcement strategy in relation to incomplete developments.

A report has been published on whether the harmonisation of the insolvency laws of EU Member States is necessary or worthwhile. The European Parliament commissioned the report, and it was produced and published by INSOL Europe, the professional association for European restructuring and insolvency specialists.

The report considers:

The European Commission has published a report by external consultants (Oxera), Should aid be granted to firms in difficulty, a study on counterfactual scenarios to restructuring state aid? It is intended to inform the Commission of the consequences for intended recipients and their relevant industries if aid is not given, including whether the aid will, in fact, save jobs and economic activity.

The Dáil Public Accounts Committee has issued a report which primarily examined the loss of "Fiduciary" taxes (such as PRSI and PAYE) arising from company insolvency. The Committee concluded that there is a need in Ireland to introduce further measures to reduce the amount of Fiduciary taxes that are lost due to the irresponsible behaviour of directors. There is a need, according to the report, for the introduction of a deterrent which will make directors aware of the negative consequences which could arise for them if they wilfully evade paying the company taxes that are due.