INTRODUCTION

This newsletter covers key updates about developments in the Insolvency Law during the month of May 2021.

We have summarized the key judgments passed by the Supreme Court of India (SC), the National Company Law Appellate Tribunal (NCLAT) and various benches of the National Company Law Tribunals (NCLT). Please see below the summary of the relevant regulatory developments.

1) NO INTERFERENCE IN THE DECISION OF THE LIQUIDATOR TAKEN IN THE BEST INTEREST OF A CORPORATE DEBTOR.

While examinership is a successful and internationally recognised rescue process for Irish companies, there has been a concern for some time that is out of reach of smaller businesses due to the associated costs. As part of the government’s response to the economic challenges of the pandemic, the Department of Enterprise has published a rescue process for small and micro businesses.

The High Court has recently brought welcome clarity to how pensions are dealt with in the event of a bankruptcy, in the case of Lehane –v- Wealth Options and Brian O'Neill.

While the recent Brexit trade deal contains various provisions for the conduct of trade in the post-Brexit era, it does not provide clarification for new cross-border insolvency proceedings involving the United Kingdom.

However, the Withdrawal Agreement which came into force on 1 February 2020 and established the terms of the UK's withdrawal from the European Union, does provide some comfort for insolvency practitioners, but only where insolvency proceedings were opened prior to the end of the Brexit transition period.

With the possibility of a no-deal Brexit looming large, the implications for Irish insolvency practitioners is something we will all have to consider. The insolvency landscape will most likely look very different when we all return to the office after Christmas. This is a discussion on some of the possible implications for Irish and UK insolvency practitioners post-Brexit.

Current Regime

The Data Protection Commission ("the DPC") has issued useful guidelines for receivers in the context of data protection.

Once a receiver is appointed, they will have access to borrowers' personal data such as the address of the property put into receivership and certain details concerning the borrowers.

The main points of the DPC's guidance are as follows:

We will soon enter a phase of the Covid19 era when more and more companies will be forced to apply for protection from their creditors under the Examinership provisions of the Companies Act, 2014. Security as always will be a key consideration for the stakeholders in this restructuring process. Fixed and floating charges are almost always well protected but what about personal or corporate guarantees?

The legislation

The legislation is very specific regarding guarantees.

The passage and the working of the Insolvency and Bankruptcy Code, 2016 (Code) is an important landmark in India’s tryst with insolvency and debt restructuring laws. Further, the interpretation provided by the courts, from holding that the Code is not a means for recovery of dues to reinforcing the primacy and commercial wisdom of the committee of creditors, along with appropriate and timely amendments by the legislature in line with the object of the Code has certainly aided in the successful implementation of the Code.

The High Court appointed an examiner to three connected companies involved in the food distribution industry on 27 March 2020 in what was effectively the first examinership of the Covid-19 pandemic period.  Fieldfisher acted on behalf of Wert Capital Ltd which was the parent company for a number of food distribution entities in a successful application for court protection for the Group from their creditors.

A Members’ Voluntary Liquidation (“MVL”) is an efficient way to wind up a solvent company and release value to members. It is most often used where the directors wish to retire, the company has realised its potential or the company is dormant. By properly winding up the Company, the danger of the company being involuntarily struck off the Register of Companies and any resulting liability for the Directors is removed. A summary of the process is as follows: