Notwithstanding the phased return to some level of normality, some businesses will continue to be significantly affected, particularly those in the leisure, travel/tourism, retail and hospitality sectors. These sectors will face longer term challenges due to social distancing requirements, consumer unease and the likely absence of international travel for many months, or perhaps even longer. However, these are not the only sectors that will suffer.

The High Court recently refused to grant an order sought by a Revenue-appointed liquidator, requiring Google Ireland to provide him with access to a private Gmail account. The Gmail account in question was believed to have been operated by the liquidated company. For their part, Google strongly resisted the liquidator’s application, citing concerns over protecting the privacy of individuals. It argued that the liquidator was seeking access to the entirety of the Gmail account which could contain diary entries and photographs as well as emails.

The Office of the Director of Corporate Enforcement (ODCE) has provided guidance on its approach to directors of companies, made insolvent by the COVID-19 pandemic, who act in good faith on objective evidence in trying to rebuild their businesses.

The issue

The consequences of the COVID-19 crisis have made many businesses that were solvent, and will likely become solvent again, technically insolvent.

Notwithstanding the phased return to some level of normality, some businesses will continue to be significantly affected, particularly those in the hospitality sector where longer term challenges may be encountered due to social distancing requirements, consumer unease and the likely absence of international travel for many months, or perhaps even longer.

Landlord and tenant relationships are likely to come under strain as tenants experience financial difficulties due to the COVID-19 pandemic. For tenant companies such financial difficulties may result in a tenant being placed in examinership, or ultimately in the appointment of a liquidator or receiver. An insolvency event generally constitutes an event of default in a commercial lease.

Irish companies are facing challenges with the sudden changes imposed on their businesses as a result of the impact of COVID-19. Some may be experiencing cash flow difficulties; others may have had to temporarily cease trading altogether.

Directors are responsible for managing their company’s affairs. This requires them to identify and navigate risks, and to ensure that appropriate strategies and where necessary contingencies are in place to anticipate and deal with such risks.

COVID-19 is an unexpected shock for many businesses. Some businesses are being significantly affected, particularly those in the travel and hospitality sectors. We consider some of the options open to otherwise good businesses facing cash-flow and other financial issues as a result of COVID-19.

How are governments dealing with COVID-19

A company incorporated under the Companies Act has its own legal personality and can institute legal proceedings in its own name. However, difficulties can arise where proceedings are commenced on behalf of a company where this has not been properly authorised by the company. In addition, where a company is a party to proceedings, in the absence of certain limited exceptions, it must retain legal representation to act on its behalf.

Authority to Institute Proceedings

Directors of the Company

We consider one case illustrating the efficiency of international insolvency proceedings commenced in Ireland, improvements to the efficiency of the appellate courts and one imminent legislative change, which will impose an administrative burden on the holders of security over book debts.

Ireland as an efficient venue for international insolvency

McCann FitzGerald acted for the Asia Pulp and Paper Group (“APP Group”) in the recent successful restructuring of over US$1 billion of debt.

In a first for the Irish restructuring market, the debt was restructured through a scheme of arrangement under section 676 of Part 11 of the Companies Act 2014 (“Part 11 Scheme of Arrangement”). On 23 October 2019, the US Bankruptcy Court granted recognition of the scheme under Chapter 15 of the US Bankruptcy Code.