Background
The Times revealed in an article last month that, according to a report from the Audit Reform Lab, a think tank at the University of Sheffield, only a quarter of the 250 largest companies listed on the London Stock Exchange to become insolvent between 2010 and 2022 had a “going concern” warning included by their auditors in what would turn out to be their final set of accounts. Of those companies 38 also declared a dividend in those accounts.
The number of company insolvencies in 2023 increased by over a third compared to 2022. The hospitality sector was particularly badly affected, with 53% more insolvencies than in 2022.
It appears that 2024 will be similarly challenging for companies in the hospitality sector. The Restaurant Association of Ireland (RAI) has set out the main challenges faced by the industry, including increased energy and labour costs, and the VAT rate reverting to 13.5% after having been reduced to 9% during the covid-19 pandemic.
Since the implementation of the Insolvency, Restructuring and Dissolution Act 2018 (the IRDA), liquidators and judicial managers in Singapore have been statutorily authorised to use third-party funding for a range of claw-back actions. They are also able to transfer company assets to funders; to assign the fruits of legal actions to funders; and to grant super-priority to funders.
The High Court has reaffirmed the test to be applied in considering an application to dismiss a bankruptcy summons grounded on a judgment.
The bankruptcy process in Ireland involves multiple steps and the debtor can seek to bring it to a halt at each step. Debtors often seek to rerun effectively the same arguments at each step, ignoring previous findings by the courts. One such step is an application to dismiss a bankruptcy summons.
Is a court order necessary for security interests granted after the appointment of external administrators? Perhaps not.
There are certain circumstances where liquidators can be held personally liable for costs orders made in proceedings taken by them.
Under the so called “Ballyrider Principles[1]”:
The Irish High Court has determined that the liquidation of an Irish aircraft leasing company, which was a 100% subsidiary of a Russian company expressly subject to EU sanctions, rebuts the presumption that the company was controlled by the Russian parent for the purpose of EU sanctions.
This enables the liquidators to deal with the assets without costly and time-consuming derogation applications.
Background
Irish company law provides that if a charge granted by a company is not registered in the Companies Registration Office (CRO) within 21 days of its creation, it is void against a liquidator and any creditor of the company. There is a duty imposed on a company which grants a charge to register the charge in the CRO but the creditor taking the charge can also do so.
Diamond Rock Developments Ltd (the Company) granted a mortgage over a property. That mortgage was registered in the Land Registry but was not registered in the CRO.
If you supply goods, the simplest step that you can take to reduce your exposure to a customer’s insolvency is to use effective retention of title (RoT).
However not all RoT clauses are effective and we see many RoT claims rejected in insolvency.
By default, once you sell goods on credit:
- the goods belong to the customer; and
- the customer owes you the purchase price.
This means that if an insolvency practitioner (IP) is appointed to the customer:
Corporate Enforcement Authority Issues Helpful Guidance Note
The Preventative Restructuring Directive
In July 2022, the European Union (Preventive Restructuring) Regulations 2022 (the Regulations) transposed the requirements of EU Directive 2019/1023 (the Preventative Restructuring Directive) into Irish law.
Certain of the consequential amendments to the Companies Act 2014 (the Act) relate to the duties and responsibilities that directors of companies have in circumstances of financial difficulty and/or insolvency.