Alternative A of the Cape Town Convention [1] now has the force of law in Ireland, following signing of an Order by the Irish Government on 10 May 2017.

The Cape Town Convention was designed to establish a uniform set of rules to provide greater certainty and predictability around the protection, prioritisation and enforcement of rights in aircraft and aircraft engines. The Convention has a commercial objective, namely to facilitate efficient forms of asset-based financing.

Alternative A

Introduction

The Irish government has signed an order pursuant to the State Airports (Shannon Group) Act 2014 (the "Order") giving immediate legal effect to the "Alternative A" insolvency provisions ("Alternative A") of the Cape Town Convention on International Interests in Mobile Equipment (the "Cape Town Convention") and the associated Aircraft Protocol (the "Protocol").

In positive news for financiers and lenders, the Irish Government has signed an order which gives immediate effect to the “Alternative A” insolvency provisions of the Cape Town Convention.

In a High Court decision of 22 May 2017 Baker J rejected a proposal by a secured lender to write down a portion of a debtor couple's mortgage debt and warehouse half of the debt as future repayment of the warehoused part of the loan was not predicated on an ability to repay. Thus, the proposal was capable of creating circumstances amounting to insolvency at the end of the mortgage term in approximately 23 years.

Facts

A recent Court of Appeal decision has found that the State has failed to adequately implement EU Legislation by failing to provide a procedure to protect employees’ entitlements in the event of an informal insolvency of their employer.

Introduction

Two recent developments may have rendered the Irish legal system less attractive to creditors. We examine the scope of these developments and the likely impact on debt collection activity in Ireland.

Rate of interest of judgment debts falls by 6%

The rate of interest on judgment debts has been reduced from 8% to 2%, with effect from 1 January 2017, in accordance with the Courts Act 1981 (Interest on Judgment Debts) Order 2016 (S.I. No 624 of 2016) (the “Order”).

The Companies Registration Office (CRO) will no longer change the designated status of a company on the register of companies from “Normal” to “Receivership” if that company has a receiver appointed over its assets.

This means that companies in receivership will no longer have the designation “Receivership” on their CRO record.

This change, which became effective on 22 March 2017, is a consequence of the Court of Appeal decision in Independent Trustee Company Limited v Registrar of Companies [2016] IECA 274.

A recent High Court case has brought about a change in the status quo involving personal insolvency arrangements and separated spouses. Banks were previously unable to complete deals with one spouse without the mutual cooperation of both parties. However the decision of JD & Personal Insolvency Acts1 has altered this position.

The High Court has recently expressed concern that distressed borrowers are being duped into paying money to the anonymous promoters of schemes, which purport to protect them from enforcement by lenders but are actually ‘utterly misguided and spurious’.

There are a number of schemes being promoted at the moment that supposedly protect borrowers in arrears from enforcement by their lender.

A petition was recently filed in the High Court on behalf of two companies, Regan Development Limited (“Regan”) and McGettigan Limited (“McGettigan”) seeking the protection of the court pursuant to the Companies Act 2014 (the "Act"), and the appointment of an Examiner. Regan owns and operates the Regency Hotel on the Swords Road in Dublin and McGettigan owns and operates a licensed premise on Queen Street, Dublin 7 and four retail units in Bray, Co. Wicklow. On presentation of the petition the Court appointed Neil Hughes of Baker Tilly Hughes Blake as Interim Examiner.