On 30 March 2012, the European Commission published a consultation on the future of European insolvency law.

The cornerstone of European insolvency law is Regulation (EC) No 1346/2000, known as the Insolvency Regulation. The Insolvency Regulation has been in force since 31 May 2002 and applies whenever a debtor has assets or creditors in more than one member state. It sets out provisions in relation to jurisdiction, recognition, applicable law and the coordination of insolvency proceedings opened in several member states.

On 25 January 2012, the Irish Government published the heads of a proposed new law, the Personal Insolvency Bill, which, it states, has the aim of providing “a new approach to dealing with insolvency” in Ireland.

The new bankruptcy provisions contained in the Civil Law (Miscellaneous Provisions) Act 2011 were commenced yesterday. The Act has been in force since 2 August.

The new provisions allow for automatic discharge on the 12th anniversary of a bankruptcy adjudication order and a reduction in the period for application for discharge from bankruptcy to five years from 12 years.

A primary aim of the regulatory amendments included in UCITS IV was to facilitate the creation of more efficient structures within the UCITS framework.

The three key aspects of UCITS IV designed to assist in achieving this result are the new management company passport, provisions permitting the creation of master-feeder structures and the terms specifically enabling cross border fund mergers.  

The Civil Law (Miscellaneous Provisions) Act 2011 was signed into law by the President on 2 August 2011.  The Act provides for certain provisions, concerning private security services, bankruptcy and family mediation services, to come into operation on such days as the Minister for Justice and Equality, by order, appoints. All other provisions of the Act came into force on 2 August.

The Act introduces a number of important reforms across a broad range of areas, including:

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

Introduction

Prior to 25 March 2011, there was no judicial decision in Ireland on whether the holder of a floating charge could validly improve its position in the order of priority of payments, vis-à-vis preferential creditors, in circumstances where its floating charge crystallises (i.e. converts into a fixed charge) prior to commencement of the winding up of a company.

InJ.D. Brian Ltd (in liquidation) & Others the High Court held that, where a floating charge crystallised prior to the commencement of a winding-up, the preferential creditors still had priority pursuant to in section 285 of the Companies Act 1963 over the holder of what had become a fixed charge.

The English court of appeal has held that a company should not be held to be balance sheet insolvent on the sole basis that its liabilities (including contingent and prospective liabilities) exceed its assets.

In BNY Corporate Trustee Services v Eurosail & Ors, the Court of Appeal considered in detail, for the first time, the construction of section 123 of the UK Insolvency Act 1986, which sets out circumstances in which a company can be deemed to be unable to pay its debts.

The relevant portions of section 123 provide as follows:

In Re: Michael McLoughlin Pharmacy Ltd. The examiner sought the High Court’s approval for a scheme of arrangement which limited his liability for negligence. The secured creditor objected as a matter of principle because such limitations of liability had become commonplace in schemes. The secured creditor made it clear that there was no suggestion of any negligence by the examiner in the particular case.

The court considered: