Table Of ContentLaw Society of Ireland
Insolvency Law
Cavendish
Publishing
Limited
London • Sydney • Portland, Oregon
Law Society of Ireland
Insolvency Law
Editor
Dr Anne-Marie Mooney Cotter
Authors
Barry Cahir
Nicholas Comyn
Bill Holohan
Julie Murphy-O’Connor
Tony O’Grady
Barry O’Neill
Michael Quinn
Doug Smith
Cavendish
Publishing
Limited
London • Sydney • Portland, Oregon
First published in Great Britain 2003 by
Cavendish Publishing Limited, The Glass House,
Wharton Street, London WC1X 9PX, United Kingdom
Telephone: + 44 (0)20 7278 8000 Facsimile: + 44 (0)20 7278 8080
Email:
ABOUT THE AUTHORS
Barry Cahir is an associate partner in William Fry, Solicitors. Barry graduated from
University College Dublin in 1995 and was admitted to the Roll of Solicitors in 1998.
Barry specialises in all aspects of insolvency law and commercial litigation, having
represented liquidators and receivers in many of Ireland’s most recent major insolvencies.
Barry has been a contributor to the commercial and business law courses at the
Incorporated Law Society of Ireland, both as a lecturer and as a tutor.
Nicholas Comyn obtained a BA in Economics from University College Dublin. He
qualified as a solicitor in 1970. He has practised extensively in the corporate and
commercial fields, specialising in insolvency, and has lectured on insolvency in the
Incorporated Law Society of Ireland for 20 years. He has been involved in one way or
another in most major liquidations, receiverships and examinerships in the Munster
area over the last 20 years. He also advises a number of multinational pharmaceutical
companies on environmental law issues. He is an associate member of the Institute of
Arbitrators and has lectured on and published several articles on commercial law issues.
Bill Holohan, BCL, LLB, FCILS, FCI Arb, is a solicitor, a notary public, an arbitrator,
a Commissioner for Oaths, an Irish trade mark agent, and a registered EU trade mark
practitioner. He obtained BCL and LLB degrees at University College Cork. He is an
Alumni of the Academy of International Law at The Hague, a Fellow of the Centre of
International Legal Studies (Salzburg, Austria), and a Fellow of the Chartered Institute
of Arbitrators. He acts as commercial and legal advisor to and is a Council member of
the Irish Franchise Association. He is an Executive Committee member of the Irish
Maritime Law Association, a member of Insol Europe (the European Insolvency
Practitioners Association) and a member of the Chambers of Commerce of Cork and
Dublin. He is the co-author of books on Bankruptcy Law and Practice in Ireland, Leasing—
Ireland, International Civil Procedures, International Rescue of Companies and International Civil
Procedures.
Julie Murphy-O’Connor obtained an LLB from Trinity College Dublin. She completed
a stage in the Council of the European Union in DG 14 in Brussels, where she worked
on the Cross-Border Insolvency Regulation. She qualified as a solicitor in 1999 and is an
associate solicitor with Matheson Ormsby Prentice, Solicitors. Julie practises in commercial
litigation, specialising in insolvency. She has been involved in most major liquidations,
receiverships and examinerships in Ireland over the past five years, acting for liquidators,
receivers and examiners from all of the major accounting firms and for the smaller firms
of insolvency specialists. She also advises creditors, including banks and other lending
institutions, in relation to their remedies against insolvent debtors. She has contributed
to a number of domestic and international publications on both insolvency and litigation-
related matters.
vi INSOLVENCY LAW
Tony O’Grady is a partner in the Commercial Litigation Group and is a member of the
Corporate Recovery and Insolvency Group. He graduated with a BCL from University
College Cork and qualified as a solicitor (Ireland, 1993). Tony’s specialist fields are corporate
recovery and insolvency law. He is also experienced in the areas of company investigations,
civil fraud actions, white collar crime and shareholder disputes. Tony acts for liquidators,
receivers and examiners from all of the major accounting firms and for the smaller firms of
insolvency specialists. He also advises creditors, including banks and other lending
institutions, in relation to their remedies against insolvent debtors. He has acted in some
capacity or other in most of the major insolvencies in Ireland of recent years. Tony also has
considerable experience of advising in relation to white collar crime issues and in particular
in relation to money laundering legislation. Tony has contributed to a number of domestic
and international publications on both insolvency and white collar crimerelated matters.
Barry O’Neill is a partner in Eugene F Collins, Solicitors. Barry has wide-ranging
specialist experience in dealing with the legal aspects of corporate and insolvency issues.
He has lectured on numerous occasions to the Law Society, to the main professional
accountancy bodies and to the International Bar Association. He is one of the compilers
of the ‘Combined Companies Act’.
Michael Quinn is a partner at William Fry, Solicitors, specialising in all aspects of insolvency
and corporate recovery. He has extensive experience in advising liquidators, receivers,
examiners and others affected by the insolvency process including investors, financial
institutions, creditors and directors and officers of companies encountering financial
difficulties. He has delivered lectures at the Incorporated Law Society of Ireland, the Irish
Centre for Commercial Law Studies and the Irish Centre for European Law. He is a member
of the Council of Insol Europe (the European Insolvency Practitioners Association).
Doug Smith is an associate with Eugene F Collins, Solicitors. He is a member of their
Corporate Recovery Unit and specialises in insolvency and corporate recovery/
restructuring. He has been involved in many high profile liquidations, examinerships
and receiverships in Ireland in recent times. Doug obtained a BA in 1990 and an LLB in
1993 from University College Galway and qualified as a solicitor in 1997. He has lectured
and written papers on various aspects of insolvency law, including lectures on the
Professional Practice Courses of the Incorporated Law Society of Ireland.
About the editor
Anne-Marie Mooney Cotter is a Montrealer, fluent in both English and French. She
earned her Bachelors degree from McGill University at the age of 18, her Juris Doctor law
degree from one of the leading Civil Rights Institutions, Howard University School of
Law, and her Doctorate degree (PhD) from Concordia University in political economy
international law on the issue of equality. Her work experience has been extensive, acting
as Chief Advisor and later Administrative Law Judge appointed by the Prime Minister to
the Veterans Review and Appeals Tribunal in Canada; Supervising Attorney in Alaska for
the Legal Services Corporation in the United States, and later Executive Director; National
Director for an Environmental Network in Canada; and is now Course Co-ordinator for
Business Law at the Law Society of Ireland. Anne-Marie is a gold medallist in figure skating.
CONTENTS
About the Authors v
Table of Cases xi
Table of Legislation xv
1 INTRODUCTION TO INSOLVENCY: OVERVIEW AND RECENT
DEVELOPMENTS 1
Michael Quinn
1.1 Introduction 1
1.2 Corporate insolvency procedures 2
1.3 Common insolvency principles 6
1.4 Creditors 6
1.5 General provisions as to priorities 6
1.6 Recent developments affecting insolvency law and practice 7
2 LIQUIDATORS—POWERS, DUTIES AND FUNCTIONS 13
Barry Cahir
2.1 Creditors 13
2.2 General provisions in relation to liquidators 14
2.3 Continuation of proceedings against a company when a winding up
order is made 14
2.4 Liquidation after receivership 14
2.5 Effect of appointment of a liquidator on agency and powers of receiver 15
2.6 Function of a liquidator 15
2.7 Duties of liquidator 16
2.8 Powers of liquidator 17
2.9 Committee of Inspection 18
2.10 Appointment of a liquidator subsequent to receiver 18
2.11 Retention of title 22
3 PROOF OF DEBT AND ASSET RECOVERY 31
Barry Cahir
3.1 Common insolvency principles 31
3.2 The pari passu rule 31
3.3 Proof of debt 31
viii INSOLVENCY LAW
3.4 Set off 31
3.5 Priorities 32
3.6 Priority of payment in liquidations 34
3.7 Compulsory liquidations 35
3.8 Remedies to swell available assets 38
3.9 Section 139 of the Companies Act 1990 41
3.10 Sections 202–05 of the Companies Act 1990 41
3.11 Floating charge 41
3.12 Set off 42
4 LIABILITY OF DIRECTORS AND SHAREHOLDERS 43
Julie Murphy-O’Connor
4.1 Introduction 43
4.2 Definition of insolvency 43
4.3 Issues for directors who are trading while insolvent 44
4.4 Advising directors of insolvent companies 54
4.5 Issues for shareholders of insolvent companies 55
5 COMPULSORY LIQUIDATIONS 57
Tony O’Grady
5.1 Introduction 57
5.2 Appointment 57
5.3 Powers and duties 58
5.4 Restriction applications 62
5.5 Remuneration 64
5.6 Discharge 64
5.7 Filing requirements 65
6 VOLUNTARY LIQUIDATIONS 67
Nicholas Comyn
6.1 Voluntary winding up: overview 67
6.2 Members’ voluntary winding up 67
6.3 Who may be appointed liquidator? 71
6.4 Functions of the liquidator 72
7 CREDITORS’ VOLUNTARY WINDING UP 73
Nicholas Comyn
7.1 When does a creditors’ winding up take place? 73
7.2 What is the test of ‘insolvency’? 73
7.3 Can the company continue to perform existing contracts even though
the company is insolvent? 73
7.4 What happens to employees? 73
CONTENTS ix
7.5 Assets—can creditors with reservation of tide (ROT) remove their goods? 74
7.6 Monies received 74
7.7 Steps to be taken 74
7.8 The Form of General Proxy 75
7.9 Creditors’ meeting 77
8 GENERAL CONCEPTS OF RECEIVERSHIPS 81
Bill Holohan
8.1 Introduction 81
8.2 Receiverships—a summary 82
8.3 How and when receivers are appointed 83
8.4 Powers, duties and functions of receiver 84
8.5 Receiver as agent of company/debenture-holder 89
8.6 Notification/publication 90
8.7 Effect of receiver’s appointment 90
8.8 The receiver’s position when appointed 91
8.9 Common insolvency principles 92
9 ADVISING PARTIES INVOLVED IN A RECEIVERSHIP 95
Bill Holohan
9.1 Advising the various parties 95
9.2 Advising the potential receiver 97
9.3 Advising contractors and suppliers 101
9.4 Advising the receiver when appointed 102
9.5 Director of Corporate Enforcement 104
9.6 Advising creditors 105
9.7 Advising a liquidator appointed to the company 108
9.8 Advising directors 111
9.9 Advising shareholders/guarantors 112
9.10 Advising employees 112
9.11 Sale of the company/assets by a receiver 115
9.12 Checklists 115
9.13 Some aspects of duties of care owed by debenture-holder or receiver 116
9.14 Purchasing from liquidator or receiver 116
10 ALTERNATIVES TO WINDING UP, COMPANY VOLUNTARY
ARRANGEMENTS AND EXAMINERSHIP AND OTHER FORMS
OF RESCUE 119
Doug Smith
10.1 Examinerships 119
10.2 Schemes of arrangement and compromises: sections 201–04 and
279 CA 1963 130
