INSOLVENCY LAW, POLICY AND PROCEDURE
i Statutory framework and substantive law
Ireland is a sovereign state in Europe and a member of the European Union since 1973. The legal system in Ireland is a combination of statute and common law in which a large emphasis is placed on precedent.
The principal statutes governing insolvency law in Ireland are as follows:
a the Companies Acts 2014, which came into operation on 1 June 2015, consolidating and replacing the previous Companies Acts;
b Council Regulation (EC) No. 1346/2000 (referred to when a debtor has its centre of main interests (COMI) in an EU Member State) (the Insolvency Regulation);2
c the National Asset Management Agency Act 2009 (relevant from the perspective of statutory receivers appointed by the National Asset Management Agency); and
d the Irish Bank Resolution Corporation Act 2013 (which introduced the concept of Special Liquidation) (the IBRC Act).
Remedies in the area of insolvency and bankruptcy have traditionally involved enforcement of security, realisation of a debtor's assets and the penalisation of resisting debtors. In recent years, however, there has been a subtle shift towards a 'rescue culture' in respect of certain companies. This has been motivated by a desire to achieve value for all stakeholders.
For those businesses that are in difficulty but can demonstrate that they have a reasonable prospect of survival3 examinership remains an attractive model for formal corporate restructuring and recovery. Examinership is a rehabilitative procedure that, broadly speaking, is a hybrid of Chapter 11 in the United States and administration in England and Wales.
Many businesses in Ireland borrowed significantly from 2000 to 2008 and much of that borrowing was used to fund property acquisitions. From 2008 onwards, there was a prevailing policy of enforcement by the lending institutions in respect of businesses and individuals who have breached covenants in their agreements. The lending institutions are taking enforcement steps in two ways: by the appointment of receivers to secured property or by issuing proceedings in the Irish courts to obtain judgments against defaulting debtors (or both). Over the past few years, large tranches of distressed loans and associated security have been purchased by venture capital and private equity funds. Even as the Irish economy has recovered, a significant amount of this distressed debt remains.
iii Insolvency procedures