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.

General Scheme Published.

The General Scheme of the Companies (Small Company Administrative Rescue Process and Miscellaneous Provisions) Bill 2021 was published this month. When enacted, this Bill will provide the legislative basis for a new corporate restructuring process that will be available to small companies: it is the Small Company Administrative Process (SCARP).

A General Scheme sets out the proposals for the text of a forthcoming Bill and the Government has granted approval for the priority drafting of this legislation (as discussed here).

Nordic Aviation DAC [2020] IEHC 445

In late 2020 the Commercial Division of the High Court approved a Scheme of Arrangement (Scheme) in respect an Irish-based aircraft leasing business Nordic Aviation Capital (NAC). The approved Scheme is of particular interest as it was recognised in the EU, UK and USA. NAC had secured and unsecured creditors in those jurisdictions on foot of loan or debenture instruments which were subject to New York, UK or German law.

The Minister of State for Trade Promotion, Digital and Company Regulation, Robert Troy TD, announced earlier this week the priority drafting of new legislation to introduce a new restructuring process. The Companies (Small Company Administrative Rescue Process and Miscellaneous Provisions) Bill 2021 will provide the statutory footing for what is now proposed to be termed the Small Company Administrative Rescue Process (“SCARP”).

There are plans to establish a new corporate rescue procedure for small companies. Currently termed the Summary Rescue Procedure, it was initially proposed by the Company Law Review Group in October 2020.

The Department of Enterprise, Trade and Employment (Department) is now seeking submissions from stakeholders to inform the development of this new restructuring procedure.

Why the need for a new corporate rescue procedure?

Apperley Investments Limited & Others v Monsoon Accessorize Limited [2020] IEHC 523

The Commercial Court has refused to apply the provisions of a Company Voluntary Arrangement (“CVA”), negotiated pursuant to the Insolvency Act 1986 in the UK, to Irish landlords as it would be “manifestly contrary to the public policy of the State”.

These proceedings were taken by Irish landlords over properties in Dublin and Cork leased to the fashion retailer Monsoon.

The streamlining of the Schemes of Arrangement (Schemes) process under the Companies Act 2014 (CA 2014) provides an option for corporate restructuring and recovery, which may not have been a feasible for some companies or corporate groups in the past.

Most companies now hold large volumes of personal data – it is almost inevitable due to the interplay between technology and business. This includes companies that become insolvent, but what obligations does a liquidator have in relation to the personal data held by a company?

Notice to stakeholders: Withdrawal of the United Kingdom and EU rules in the field of civil justice and private international law.

On 27 August 2020, the European Commission published a ‘Notice to Stakeholders’ setting out how EU laws in the areas of civil justice and private international law will apply when the Brexit transition period ends on the 31 December 2020.

This Notice replaces an earlier notice published in January 2019 and a document with questions and answers published in April 2019.

As many companies continue to suffer economic hardship due to the ongoing COVID-19 pandemic, it is likely that mergers and acquisitions of companies and assets in distress will feature as a significant proportion of overall M&A transactions in Ireland during the coming months.