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 basis of the recommendations should be supported by evidence in the application to the court.
The report of the examiner must be set down for consideration by the court as soon as may be after receipt of the report by the court. The following persons may appear and be heard at the hearing:
- the company concerned;
- the examiner;
- any creditor or member whose claim or interest would be impaired if the proposals were implemented;
- the directors of the company.
Court Hearing I
The whole or part of any proceedings may be heard otherwise than in public if the court, in the interests of justice, considers that the interests of the company concerned or of its creditors as a whole so require
At the hearing, the court may, as it thinks proper, confirm, confirm subject to modifications, or refuse to confirm, the proposals for the compromise or arrangement concerned. The court shall not confirm any proposals unless
- at least one class of creditors whose interests or claims would be impaired by the implementation of the proposals has accepted the proposals;
- the court is satisfied that the proposals are fair and equitable in relation to any class of members or creditors that has not accepted the proposals and whose interests or claims would be impaired by implementation;
- the court is satisfied that the proposals are not unfairly prejudicial to the interests of any interested party; and
- in any case, it shall not confirm any proposals if the sole or primary purpose of them is the avoidance of payment of tax due.
Court Hearing II
The court shall not confirm any proposals in respect of a company to which an examiner has been appointed if the proposals would have the effect of impairing the interests of the creditors of the company in such a manner as to unfairly favour the interests of the creditors or members of any company to which it is related, being a company to which that examiner has been appointed examiner.
A creditor’s claim against a company is deemed to be impaired if the creditor receives less in payment of his or her claim than the full amount due in respect of the claim at the date of presentation of the petition for the appointment of the examiner. The interests of a member of a company in the company is impaired if—
- the nominal value of his or her shareholding in the company is reduced, or
- where the member is entitled to a fixed dividend in respect of his or her shareholding in the company, the amount of that dividend is reduced, or
- the member is deprived of all or any part of the rights accruing to him or her by virtue of his or her shareholding in the company, or
- the percentage of his or her interest in the total issued share capital of the company is reduced, or
- the member is deprived of his or her shareholding in the company.
An examiner or, where appropriate, such other person as the court may direct, shall, within 14 days after the date of delivery to the Registrar of every order made cause to be published in the CRO Gazette notice of such delivery.
A confirmed scheme of arrangement is binding on creditors, including those whose debts have been written down. The confirmation stage is to take place promptly after the presentation of the examiner’s report.
Objections may be made. Creditors or shareholders, whose interests are impaired, may be heard at the confirmation meeting.
The examiner is obliged to bring concerns, of which he is notified, to the attention of the court. The court may direct the creditors who wish to make objections, be allowed to submit objections in writing to the examiner. Others may be permitted to make submissions.
The court decides whether or not to approve the proposed scheme. On consideration of the report, it may make such order as it considers proper. It may confirm or refuse the proposal. It may confirm the proposal, subject to modifications.
The Court may not confirm the proposals unless
- one class of creditors whose interests have been impaired have accepted it;
- it is satisfied that the proposals are fair and equitable in relation to the class of members and creditors whose claims or interests would be impaired and who have not accepted it;
- it is satisfied that it is not unfairly prejudicial to the interests of any party; nd
- the sole or primary purpose of the proposal is not the avoidance of tax.
The proposals must enable the survival of the company or the whole or part of its business as a going concern. They must be fair and equitable in relation to any class of members or creditors who have not accepted the proposal, and whose interest is claimed to be impaired by the implementation of the scheme. The terms must not be unfairly prejudicial to the interests of an interested party.
Where related companies are the subject of the examinership, the proposals must not impair the interests of their creditors, so as to favour the creditors or shareholders of the principal company. The sole or primary purpose must not be for the avoidance of tax due.
The proposals must not abrogate the rights of a lessor of real property. Similar provisions apply to leases and hire purchase of goods of substantial value. If the scheme would reduce or extinguish a right to rent or other periodic payment which would fall due after the commencement of the scheme or limit the right to or enforce obligations or other covenants in the case of a lease of property other than land, then it is deemed unfairly prejudicial. The Court must be of the opinion it is of substantial value.
The court may make orders for the purpose of the implementation of the scheme. It may defer the scheme coming into effect and extend protection. Protection usually ceases when the scheme becomes effective. The examiner’s appointment will usually thereupon cease if it has not otherwise done so.
Effect of Confirmation
Where the court confirms proposals (with or without modifications), the proposals become binding on all the members or classes of members, as the case may be, affected by the proposal and also on the company. Where the court confirms a proposal, it may make such orders for the implementation of its decision as it deems fit.
The proposals bind all the creditors or the class or classes of creditors affected in respect of any claim or claims against the company. It also binds any person other than the company who, under any enactment, rule of law or otherwise, is liable for all or any part of the debts of the company.
A compromise or scheme of arrangement, proposals for which have been confirmed, come into effect from a date fixed by the court. The date (unless the court deems it appropriate to fix a later one) shall fall no later than 21 days after the date of the proposals’ confirmation.
On the confirmation of proposals, a certified copy of any order made by the court is be delivered by the examiner, or by such person as the court may direct, to the CRO.
Where the court refuses to confirm proposals or if the report of an examiner concludes that, following the required meetings of creditors of a company, it has not been possible to reach agreement on a compromise or scheme of arrangement, the court may, if it considers it just and equitable to do so, make an order for the winding-up of the company or any other order as it deems fit.
At the hearing in relation to the proposals, a member or creditor whose interest or claim would be impaired by the proposals may object to their confirmation by the court on any of the following grounds
- that there was some material irregularity at or in relation to a meeting;
- that acceptance of the proposals by the meeting was obtained by improper means;
- that the proposals were put forward for an improper purpose;
- that the proposals unfairly prejudice the interests of the objector.
Any person who voted to accept the proposals may not object to their confirmation by the court except on the grounds that such acceptance was obtained by improper means; or that after voting to accept the proposals the person became aware that the proposals were put forward for an improper purpose.
The examiner may include proposals in his report, which involve the impairment of the interests of members or creditors of the company. The court must undertake an examination of whether the interests are impaired, irrespective of whether the parties concerned appear and make representations. The court will have regard to a wider range of interests, including those of the employees.
Where the court upholds an objection, the court may make such order as it deems fit, including an order that the decision of any meeting be set aside and an order that any meeting be reconvened.
The examiner may take account of claims which are disputed on a without prejudice basis. He may allow the claimed creditor to vote.
Objections may be made on procedural grounds. There may be a material irregularity in relation to the meeting of creditors. The proposal may be set aside if it has been obtained by improper means or for an improper purpose. The court will not invalidate the procedures due to minor irregularities. The defect must be material.
Revocation of Protection I
The protection granted to a company shall cease—
- on the coming into effect of a compromise or scheme of arrangement under this Part in relation to the company; or
- on such earlier date as the court may direct.
Where a company ceases to be under the protection of the court, the appointment of the examiner shall terminate on the date of such cessation.
The company or any interested party may, within 180 days after the date of confirmation by the court, of the proposals in relation to the company, apply to the court for revocation of that confirmation because it was procured by fraud. On such an application, the court, if satisfied that that confirmation was procured by fraud, may revoke the confirmation on such terms and conditions, particularly with regard to the protection of the rights of parties acquiring interests or property in good faith and for value in reliance on that confirmation, as it deems fit.
Revocation of Protection II
Protection usually ceases when the scheme becomes effective. The examiner’s appointment will usually thereupon cease if it has not otherwise done so.The court may make orders for the purpose of the implementation of the scheme. It may defer the scheme coming into effect and extend protection.
As soon as practicable after the revocation of such a confirmation, a certified copy of the order made by the court shall be delivered to
- the Registrar;
- if the company is a financial services entity, the Central Bank;
- irrespective of whether it constitutes any of the preceding kinds of company — the Director of Corporate Enforcement,
by such person as the court may direct.
References and Sources
Companies Act 2014 S.540- S. 544(Irish Statute Book)
Companies Act 2014: An Annotation (2015) Conroy
Law of Companies 4th Ed. (2016) Ch.23 Courtney
Keane on Company Law 5th Ed. (2016) Ch. 37 Hutchinson
Other Irish Sources
Tables of Origins & Destinations Companies Act 2014 (2016) Bloomsbury
Introduction to Irish Company Law 4th Ed. (2015) Callanan
Bloomsbury’s Guide to the Companies Act 2015 Courtney & Ors
Company Law in Ireland 2nd Ed. (2015) Thuillier
Pre-2014 Legislation Editions
Modern Irish Company Law 2nd Ed. (2001) Ellis
Cases & Materials Company Law 2nd Ed. (1998) Forde
Company Law 4th Ed. (2008) Forde & Kennedy
Corporations & Partnerships in Ireland (2010) Lynch-Fannon & Cuddihy
Companies Acts 1963-2012 (2012) MacCann & Courtney
Constitutional Rights of Companies (2007) O’Neill
Court Applications Under the Companies Act (2013) Samad
Company Law – Nutshell 3rd Ed. (2013) McConville
Questions & Answers on Company Law (2008) McGrath, N & Murphy
Make That Grade Irish Company Law 5th Ed. (2015) Murphy
Company Law BELR Series (2015) O’Mahony
Companies Act 2006 (UK) (Legilsation.gov.uk)
Statute books Blackstone’s statutes on company law (OUP)
Gower Principles of Modern Company Law 10th Ed. (2016) P. and S. Worthington
Company Law in Context 2nd Ed. (2012) D Kershaw
Company Law (9th Ed.) OUP (2016) J Lowry and A Dignam
Cases and Materials in Company law 11th Ed (2016) Sealy and Worthington
UK Practitioners Services
Tolley’s Company Law Handbook
Gore-Browne on Companies
Palmer’s Company Law