Insolvency Presentation

08 March 2011

 

Presentation to IRISH PROPERTY COUNCIL

 

Agenda

  • PG Litigation
  • Enforcement of Judgments
  • Scheme of Arrangement
  • Bankruptcy in Ireland – an explanation
  • Bankruptcy – creditors application

 

Personal Guarantee Litigation

Typical Defences

  • No Independent legal advice
  • Not ‘all sums due’
  • Conditions not met by bank

 

HOWEVER Commercial Court unsympathetic

 

Enforcement of Judgment

  • Registration of Judgment
  • Instalment/garnishee order
  • Sheriff
  • Judgment mortgage
  • Bankruptcy

 

Enforcement methods

  • Registration of Judgment in Registry of Judgments + publication in StubbsGazette
  • Instalment/garnishee order

e.g. ACC application against Simon Kelly €100 pm re €17mdebt

  • Appointment of  Sheriff

Seizes goods to the value of the debt and sells them to satisfy the creditor

  • Judgment mortgage

Register judgment as a mortgage against the properties registered in name of debtor

 

Personal debts - Voluntary scheme

E.g. SeánFitzpatrick

 

  • Statement of Affairs of assets and liabilities
  • Offering creditors better outcome than bankruptcy
  • Difficulty: ‘pound of flesh’ mentality
  • Difficulty: unanimous support from creditors

 

Bankruptcy – an explanation

Bankruptcy Act 1988 + S.I. 79 of 1989

Anyone can apply where €1,900.00 unpaid debt + assets

Seizure of an individual’s assets.  Sold to pay creditors.

 

Remain Bankrupt unless

(i) creditors paid

(ii)consent of creditors

(iii) settlement with 60% creditors

(iv)    50 c in €1 paid out

(v) 12 year expiry (reduction to 6 years at Bill stage)

 

Creditors application

Creditor’s Petition on ‘act of bankruptcy’

Bankruptcy Summons – requests payment within 14 days

 

Conditions:

(i)within 3 months of “act of bankruptcy”

(ii) liquidated sum

(iii) €1,900 or more

(iv) lives in Ireland or lived there a year beforehand

 

Newspaper advertisement

 

Bankruptcy – practical sanction

Statement of Affairs (assets and liabilities)

All assets transfer to ‘Official Assignee’ except ‘necessaries’ e.g. tools for work

Family home, Inheritance, Salary/Pension

 

•Credit – declaration for credit of €650.00 or more

•Director/Public life restriction

•Register

 

Bankruptcy Tourism

•2008 – 8 adjudications–v-  67,000 in UK

•2009 – 17 adjudications–v-  74,000 in UK

•2008 - 1 Irish IVA –v- 39,000 UK IVA’s

•2009 - 7 Irish IVA’s –v- 47,000 UK IVA’s

•12 years in Ireland –v- 12 months in UK

•EU Regulation on Insolvency Proceedings - Council Regulation (EC) No 1346/2000– aims to end “forum shopping”

 

Bankruptcy Tourism

•Courts of the debtors' “centreof main interests” have the exclusive power to start insolvency proceedings

•Courts look at banking arrangements, tax regime and country where the debtor's home is to determine COMI.

•Test : on the date of application NOT at time business conducted.

•Country in which the debts were incurred not necessarily material

•Relocation must not be artificial for the purpose of the presentation

 

Bankruptcy Tourism

•UK Official Receiver investigates where the bankrupt recently moved  to UK before the bankruptcy Order

•Once an Order made in EU – European recognition

•US -  person must reside, have a place of business or own property there .  Varies from State to State. 

•UNCITRALModel Law on Insolvency – Ireland not a signatory = no formal recognition legislation from US

 

Companies - LIQUIDATION

  • Members Voluntary - solvent
  • Creditors Voluntary – insolvent
  • Resolution + Notice to Creditors + advertise in papers
  • Statement of affairs, appointment of liquidator +committee of inspection
  • Court Liquidation– usually creditors following a s.214notice.

 

Companies - ALTERNATIVE

Examinership

Apply for Court protection (max 100 days) against creditor

Real prospect of survival

Developers out of fashion –e.g. Carroll, McNamara

 

Scheme of Arrangement

–No Court Protection – relationship with creditors paramount

–Statement of Affairs presented

–Creditors offered better terms than on wind up

 

Receivership

Receiver appointed by bank to secure specific assets on foot of a debenture

Receiver may continue business or sell the asset to pay down the debt

 

•Larry Fenelon and Declan Tormey

 

•www.lemansolicitors.com

 

•(01) 639 3000