Executive Summary

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.

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.

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

The manufacturing sector in Germany is currently being hit hard. The reasons are massive increases in material prices and energy costs due to the indirect consequences of the Corona pandemic, disrupted supply chains and the Ukraine war. As a consequence of the economic crisis and insolvency of an important customer, Berner GmbH, based in Osnabrück, decided to continue its restructuring course within the framework of a petition filed on 23.03.2023 with the competent Osnabrück Local Court for the initiation of insolvency proceedings in self -administration.

Das produzierende Gewerbe in Deutschland wird derzeit erheblich in Mitleidenschaft gezogen. Grund sind massive Materialpreis- und Energiekostenerhöhungen aufgrund der mittelbaren Folgen der Corona-Pandemie, gestörten Lieferketten und dem Ukrainekrieg. Als Folge der Wirtschaftskrise sowie der Insolvenz eines bedeutenden Kunden hat sich auch die in Osnabrück ansässige Berner GmbH entschieden, ihren Restrukturierungskurs im Rahmen eines am 23.03.2023 beim zuständigen Amtsgericht in Osnabrück gestellten Antrages auf Einleitung eines Insolvenzverfahrens in Eigenverwaltung fortzusetzen.

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:

Mit Entscheidung des BGH vom 27. Oktober 2022 (IX ZR 145/21) hat dieser die insolvenzrechtliche Streitigkeit zum Verwertungsrecht des Insolvenzverwalters entschieden. Ausweislich der Entscheidung erstreckt sich das Verwertungsrecht des Insolvenzverwalters nach § 166 InsO nicht auf sonstige Rechte, wie insbesondere verpfändete Gesellschaftsanteile oder abgetretene oder verpfändete IP-Rechte erstreckt. Der BGH lehnt eine analoge Anwendung ausdrücklich ab.

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