Irish Insolvency Procedures And International Restructurings

• Published date: 26 September 2022
• Subject Matter: Insolvency/Bankruptcy/Re-structuring, Financial Restructuring, Insolvency/Bankruptcy
• Law Firm: Matheson
• Author: Ms Julie Murphy-O'Connor and Kevin Gahan

Introduction

The Irish restructuring and insolvency regime is well-established and internationally recognised. The underlying principles have been heavily shaped and influenced historically by the common law system and in recent years have been integrated in the EU framework under the Recast Insolvency Regulation, augmented by the provisions of the Rome Regulation and Recast Brussels Regulation. Ireland is generally regarded as having a creditor friendly and flexible restructuring and insolvency framework providing the required degree of certainty for both creditors and debtors.

Irish insolvency procedures

There are a variety of insolvency and restructuring solutions available, the main ones of which are:

• Liquidation - an insolvent company can be wound up by the High Court (compulsory liquidation) or by way of a shareholders' resolution followed by a creditors' meeting (creditors' voluntary liquidation).
• Examinership - similar in many respects to the Chapter 11 procedure in the United States and, to a lesser extent, administration in the United Kingdom. The procedure's main attraction is that a simple majority of only one impaired class of creditor must vote in favour of the scheme in order for it to be approved by the court.
• Statutory schemes of arrangement - although the statutory scheme of arrangement (similar in all material ways to the English scheme of arrangement) is not necessarily an insolvency process, it can be used to facilitate a broad range of possible restructurings and arrangements between a company and its members or creditors.
• Receivership - whilst this is the usual method for enforcing security, restructurings are regularly implemented using a pre-pack receivership process.

International restructurings in Ireland

As one of the most open economies in the world for trade and finance, Ireland has proved in recent years to be a jurisdiction of choice for a number of significant and complex cross-border restructurings, aided by a combination of Brexit and the COVID-19 pandemic.

In re Ballantyne Re plc an Irish scheme of arrangement was used to effect the restructuring of the company's reinsurance obligations and US$1.65bn of senior New York law governed debt. In sanctioning the scheme, the High Court demonstrated a clear willingness to take into account established case law from a number of jurisdictions, including the UK. Following the sanction hearing in Ireland, an application was successfully made to have the Irish scheme recognised...