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]”:

In early 2016, the Government commissioned an examination into laws protecting employees following the overnight closure of the historic Clerys department store in Dublin in June 2015, with the immediate loss of 460 jobs. We review the recently published report which sets out six key proposals for legislative reform.

The Supreme Court has held that a floating charge, crystallised by notice, prior to the commencement of a winding up, ranks ahead of preferential creditors. However, the Court expressed the view that the relevant legislation needs to be amended to reverse the “undoubtedly unsatisfactory outcome”.

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.

In the Matter of Bell Lines Limited (In Liquidation)  

That decision has effectively been relied on since 2006 for the proposition that, except for the Social Insurance Fund, a party advancing monies for the payment of remuneration falling due before the commencement of an insolvency process but actually paid after such commencement is not entitled to subrogate to the employees’ preferential claims.

The Appeal

In the current economic climate, many companies are facing the prospect of their business becoming insolvent.

From an employer’s, and indeed an insolvency practitioner’s perspective, the rights and obligations owing to employees of which they need to be aware depend on the nature of the insolvency and the terms of the contract of employment.

The rapid downturn in the economy means company directors are faced with new challenges, possibly on a greater scale and more complex than ever before. Directors are responsible for managing the affairs of a company, identifying risk and ensuring that there is a strategy and a system in place to deal with those risks.

Weak and inadequate management by the directors may contribute to a weak financial performance and can lead to damage to business reputation, adverse media attention and damage to the business itself.