Nature of Examinership I Examinership seeks to save a fundamentally sound business which is insolvent, in a manner that is not unfair to other interested parties. A company may be insolvent where it is unable to pay its debts as they fall due or where its liabilities are greater than its assets, including contingent liabilities. It is deemed insolvent if it […]
Petition for Examinership A petition for examinership may be made by the company itself, its directors, any creditor or least one-tenth in value of its shareholders. The Central Bank only, may petition for examinership in the case of an insurer, a bank and a range of other financial services sectors, intermediaries and service providers. The petition is presented to the […]
Access to Information Examiners are entitled to access to the company’s books, account and records. They may require persons to give sworn evidence regarding the affairs of the company. Directors, secretaries and other officers of the company are obliged to co-operate with the examiner. The may be required to attend and may be examined on oath, either verbally or by […]
Investigative Powers An examiner has powers to make investigations for the purpose of the formulation of his report and recommendations. The court may order the examiner to investigate particular matters, including, in particular, alleged default on the part of directors. The examiner has the rights and powers of a statutory auditor of a company and the obligation to supply information […]
Proposals The principal function of the examiner is to examine the affairs of the company and to formulate proposals for its survival as a going concern. The proposals must be formulated as soon as practicable. This should generally be done within 30 days. A report must be made to the Court within 35 days. At least three days’ notice must […]
Overview The company as distinct from the examiner may, with court approval, repudiate uncompleted contracts to which it is a party where there are proposals for a compromise or scheme of arrangement. Parties who suffer loss as a result of repudiation become an unsecured creditor for the amount of the loss. On application, the court may determine the amount concerned […]
Examiner’s Report Following the meetings of the members and creditors, the examiner prepares a report for the court. This sets out the details of proposals, any modifications, the recommendations of the committee of creditors, the resolutions passed in meetings, a statement of assets and liabilities, a list of creditors and the amount owing, the examiner’s recommendations, certain other matters. The […]
Reasonable Prospects There must be a reasonable prospect of the survival of the company and the whole or part of its undertaking as a going concern. A company may be a going concern, even if it has not actively traded in the very recent past because of financial constraints, provided that there is a prior trading record. There must be […]
Examiner and the Directors I The examiner is an officer of the court. He is under the control of the court and owes duties of utmost good faith to it. The principal function of the examiner is to investigate the affairs of the company and prepare a report about its prospective survival or otherwise. The report is made for the […]
Overview Bankruptcy law is designed both to assist creditors and protect debtors. In the absence of insolvency law, a creditor who is first to obtain a judgment/court order and enforce against a debtor could potentially take and keep all the debtor’s assets to the exclusion of all other unsecured creditors. This would lead to a race to enforce and would […]
Vesting of Bankrupt’s Assets All property and assets belonging to the bankrupt vest in the Official Assignee for the benefit of creditors, subject to certain exceptions. The bankrupt must notify the Official Assignee of property later acquired. Where a trustee in bankruptcy is appointed, the assets then vest in the trustee. Vesting takes place automatically. The property which vests in […]
The Official Assignee The Official Assignee’s office was transferred from the Courts Service to the Insolvency Service under the Personal Insolvency Act 2012. The Official Assignee is a member of the staff of the Insolvency Service. In relation to matters of general administration, he is subject to the general direction of the Director of the Insolvency Service. A Deputy Official […]
Powers and Functions of Official Assignee I The functions of the Official Assignee are to get in and realise the property, to ascertain the debts and liabilities and to distribute the assets in accordance with the Bankruptcy Act. The Official Assignee may in case of doubt or difficulty seek the directions of the Court in connection with the affairs of any […]
Adjustment of Bankrupt’s Estate There are provisions in the Bankruptcy Act allowing the Official Assignee or trustee to get rid of onerous property and to reclaim assets that have been wrongfully transferred by the bankrupt. The former provision facilitates the disclaiming of assets which carry liabilities which may drain the bankrupt’s assets. There is a single provision in relation to […]
Order of Entitlement In bankruptcy, the trustee in bankruptcy or Official Assignee takes control of all of the debtor’s assets, except a limited number of excluded assets, and sells or realises them for the benefit of the creditors. In distributing the proceeds of the sale of the bankrupt’s assets, the fees and expense of the bankruptcy official are first deducted. […]
Income (pre 3/12/2013 Provisions) The Official Assignee can apply to the court for directions regarding the bankrupt’s income. This power applies to earned and unearned income including pensions in payment. The provision in relation to income and pensions were reformed in 2013. The first paragraphs deal with the earlier position and the later paragraphs deal with the reformed position The […]
Discharge and Termination I An individual is subject to bankruptcy restrictions until he is discharged from bankruptcy. A discharge frees the debtor from all pre-bankruptcy liabilities.Upon discharge the bankrupt is discharged from debts which could have been proved for in the bankruptcy. No further recovery may be had from the bankrupt. Upon discharge, there may be continuing obligations on the […]
Partnerships and Insolvency Partnerships constitute an important mechanism for undertaking business. In certain sectors, such as the legal profession, a business may not be incorporated as a company and must practice as sole traders or partnerships. A partnership will arise automatically, where persons undertake business in common. A partnership is not a separate legal entity. Ultimately, the partners are fully […]
Insolvency cross-border issue. There is an EU wide Regulation on cross-border insolvency. It does not seek to harmonise laws in the area of insolvency as such. Instead, it provides mandatory rules as to which jurisdiction must be recognised as pre-eminent and requires co-operation and assistance by the courts and authorities of other EU states. The basic rule is the courts […]
Liquidation I The winding up or liquidation of a company refers to the realisation of its assets and the distribution of the proceeds to the persons entitled. In the case of an insolvent liquidation, the persons entitled will usually be the general body of creditors. In the case of a solvent liquidation, the persons entitled after the payment of external creditors, loan capital […]