The EU (Preventative Restructuring) Regulations 2022 (the Regulations) were signed into law on 27 July 2022. The Regulations largely focus on the examinership regime in Ireland which is already very comprehensive. However, the Regulations also include amendments to the Companies Act 2014 (the Act) in certain areas including codifying the duty of directors to have regard to creditor’s interests when facing insolvency.

Changes to the Act

In a William Fry article published earlier this year, we discussed the Irish government's approval to opt-in to a regulation amending Annexes A and B to the European Insolvency Regulation 2015/848 (EIR Recast) regarding the recognition of insolvency processes recently introduced in other EU Member States.

The EU Directive on Preventive Restructuring Frameworks (the“Directive”) precipitated a pan-European review by Member States of their corporate restructuring statutes. Several Member States (including Germany and the Netherlands), as well as the United Kingdom, made sweeping changes to their insolvency processes, in some cases introducing entirely new restructuring mechanisms. By contrast, Ireland preserved its examinership regime, introduced over 30 years ago.

Changes have been introduced to the current Irish examinership regime with effect from 29 July 2022 when the European Union (Preventive Restructuring) Regulations 2022 (the “Regulations”) transposed into Irish Law certain mandatory articles of the European Union Preventive Restructuring Directive (EU Directive 2019/1023) (the “Directive”) that relate to corporate insolvency.

Some 12 months ago, following the publication of that year’s Courts Service Annual Report, we suggested that 2020 would be remembered as a year like none other. However, a year later, the publication of the Courts Service Annual Report for 2021 (Report) describes a year of legal activity, in a debt recovery context, that very closely mirrors 2020.

On the 29th July 2022, the European Union (Preventive Restructuring) Regulations 2022 (the ‘Regulations’) were signed into law by the Minister for Enterprise, Trade and Employment.

On the 29th July 2022, the European Union (Preventive Restructuring) Regulations 2022 (the ‘Regulations’) were signed into law by the Minister for Enterprise, Trade and Employment.

The European Union (Preventive Restructuring) Regulations 2022 have amended the Companies Act 2014 so as to require for the first time in statute that directors of companies unable, or likely to be unable, to pay their debts, must have regard to the interests of creditors.

On Friday, 29 July the Minister for Enterprise, Trade and Employment signed into law the European Union (Preventative Restructuring) Regulations 2022 (the "Regulations").

Reports last week of the significant increase in corporate insolvencies and voluntary liquidations in England and Wales for Q2 demonstrate the combined impact of government COVID-19 support being withdrawn, soaring energy and fuel costs, and weakening demand – and are being reflected in the nature of the instructions coming into our global jurisdictions from distressed companies across the globe.

Introduction

Section 819 of the Companies Act 2014 operates to restrict directors of insolvent companies from being appointed or acting as a director or secretary of a company and from being concerned in or taking part in the formation or promotion of a company. Any director who falls foul of s.819 is subject to a mandatory period of restriction of 5 years. The primary purpose of s. 819 is to protect the public from persons who, by their conduct, have proven themselves unfit to hold the office and discharge the duties of a director.