A company that is insolvent or facing insolvency can seek protection from its creditors in the Circuit Court or High Court, depending on the size of the company. During the protection period, creditors cannot seek to recover debts owed to them by the company or assets held by the company. This protection also extends to guarantors of a company’s liabilities, who cannot be pursued under their guarantees for so long as the company is under court protection.

The Land and Conveyancing Law Reform (Amendment) Act 2019 (the “Act”) introduces a list of factors that must be taken into consideration by the Court before an order for possession can be granted or refused. The Act builds upon the protections given to borrowers under the Personal Insolvency legislation, which allows the Court to adjourn proceedings to facilitate a borrower getting a proposal together for a Personal Insolvency Arrangement (“PIA”).

When a company is unable to pay its debts as they fall due, a director’s duties shift from the management of the company for the benefit of the shareholders, to ensuring the company’s creditors are not disadvantaged by the company continuing to trade.

The directors should seek and comply with professional advice from their auditors and solicitors regarding any decision to continue trading for an interim period.

The High Court recently considered the scope of an interim examiner's powers in Re M.D.Y. Construction Ltd [2018] IEHC 676.

Binding actions by the Interim Examiner

Of interest to the High Court was the timeline within which certain actions were taken by the interim examiner appointed to M.D.Y. Construction Limited (the Company). Prior to confirmation of his appointment as examiner, the interim examiner entered into a binding investment agreement with a third party to fund proposals for a scheme of arrangement.

Bankruptcy law has always sought to strike a balance between the rights of creditors and debtors. In Ireland, bankruptcy and personal insolvency law has incurred seismic change over the past decade. Many of the legislative changes have been implemented from a policy basis of assisting the debtor. We look at recent developments, from the point of view of the petitioning creditor in any bankruptcy.

Automatic discharge from bankruptcy

Following the approach of the courts of England and Wales, the Supreme Court has stated unequivocally that it can no longer be said that the rules of equity are carved in stone, or are express immutable principles, unless changed by the Oireachtas.

In ACC Loan Management v Rickard, the defendant defaulted on a loan. ACC obtained judgment against him and then successfully applied to have a receiver appointed by way of equitable execution over payments which the defendant was due to receive from the Department of Agriculture under an EU farm payments scheme.

The appointment of a receiver by way of equitable execution has generally been considered a “remedy of last resort”[1] and, for over a hundred years, courts have expressed differing views as to when they could appoint such a receiver.

The default setting for the hearing of many contested debt recovery and security enforcement cases is by way of affidavit evidence, particularly in the High Court[1]. The creditor swears an affidavit setting out the reasons why it maintains the court should rule in its favour. Certain documents can be presented as exhibits that back up its case such as a contract.

It is now well documented that many owners’ management companies are facing the prospect of litigating to recover the cost of remedial works for defective developments or passing the cost onto the owners themselves. Given the passage of time since the construction of the developments and the insolvency of many of the developers and contractors involved in those projects following the financial crisis, management companies often face an uphill battle to recover damages.

In 2018 the Supreme Court delivered its much-awaited decision in the case of SPV OSUS Ltd v HSBC Institutional Trust Services (Ireland) Ltd & Ors where it confirmed that the assignment of a claim is unenforceable in Irish law unless the assignment is ancillary to a bona fide transaction or the assignee has a genuine commercial interest in the assignment.