by Pamela Fitzpatrick August-02-2023 in Commercial & Business, Insolvency & Restructuring
Background
On 30 May 2023, MAC-Interiors Limited (“Mac-Interiors”), a private limited company incorporated and registered in Northern Ireland, but with its centre of main interests in Ireland, presented a petition for the appointment of an examiner after projecting a deficit of approximately €9 million.
Kieran Wallace of Interpath Advisory was appointed as interim examiner pending the hearing of the petition. However, an issue arose as to whether the court had jurisdiction to make the appointment in circumstances where Mac-Interiors was not a company that was registered within the State. In addition, since Mac-Interiors was not registered in Ireland under the Companies Act 2014 (the “2014 Act”), it was unclear as to whether it was possible for the company to enter the examinership process in Ireland.
In bringing the petition, Mac-Interiors invoked Article 3.1 of the EU Insolvency Regulation Recast, EU 2015/848 (the "Recast Regulation”), which confers on the Irish Courts, jurisdiction to open main insolvency proceedings in respect of a debtor with its centre of main interests in the State, regardless of its place of incorporation.
Article 3.1 of the Recast Regulation provides:-
"The courts of the Member State within the territory of which the centre of the debtor's main interests is situated shall have jurisdiction to open insolvency proceedings (‘main insolvency proceedings’)".
The Recast Regulation also provides that the place of the registered office shall be presumed to be the centre of main interests, in the absence of proof to the contrary.
The Hearing of the Petition
The petition was heard by the High Court (Mr Justice Quinn) on 14 June 2023 and written judgment was delivered on 11 July 2023. The High Court, for the first time, made orders appointing an examiner to a foreign registered, non-EU company. The Court noted that it was being asked to consider ‘a significant and previously undecided point regarding the jurisdiction of the Court to make the appointment’. On that basis, the Court considered it necessary to deliver a definitive decision on the matter.
In making the orders, the Court found that by virtue of the doctrine of direct effect, the Recast Regulation formed part of Irish law. In addition, the Court confirmed that section 508(2), Part 10 of the 2014 Act, which governs the framework of examinership within the State, was subject to the Recast Regulation. The Court also confirmed that Article 3 of the Recast Regulation established a harmonised rule, vesting jurisdiction by reference to ‘the centre of main interests of a company’ and did not permit the distinguishing of companies based on their place of incorporation. It was on this basis that the Court accepted that it had jurisdiction to open main insolvency proceedings.
Having accepted jurisdiction to open insolvency proceedings, the Court was then required to examine the evidence relied upon to demonstrate that Mac-Interiors had its centre of main interests in Ireland. Taking into account the evidence submitted by Mac-Interiors as part of its application, the Court was satisfied in finding that Mac-Interiors’ centre of main interests was in Ireland. The Court based its decision on a number of factors including the fact that the principal commercial activity of Mac-Interiors has been conducted in this jurisdiction since its foundation, the majority of physical board and management meetings take place in Ireland, all of the employees are resident in Ireland and in particular, Mac-Interiors is resident in Ireland and files tax returns only in Ireland. The Court found that, based on the foregoing factors, it was satisfied that the ‘evidence presented demonstrated that third parties, notably creditors, regard Dublin as the centre from which the Company trades and where its affairs are administered’ and that the presumption in favour of the place of registered office had been rebutted.
In light of the above, the Court held it was satisfied that it had jurisdiction to open main insolvency proceedings, that Mac-Interior’s centre of main interests was in Ireland and that the pre-conditions to the appointment of an examiner had been met. Accordingly, the Court exercised its discretion to appoint an examiner to Mac-Interiors.
Comment
This decision is the first of its kind in Ireland and can be seen as a positive development in circumstances where it has now been confirmed that a foreign registered, non-EU company, with its centre of main interests in Ireland, may be in a position to avail of Ireland’s well-established examinership regime.
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About the Author
Pamela Fitzpatrick
Pamela is a senior associate solicitor in the Commercial and Business team at Hayes solicitors. She specialises in commercial litigation and dispute resolution acting for financial institutions, private equity funds, private companies and individuals in a variety of matters including enforcement and recovery actions, landlord and tenant disputes and general litigation cases. Pamela also provides advice on a wide range of commercial and business law matters, including data protection law and the review and drafting of commercial contracts.