a) Companies (Amending) Law (No.3) Law of 2015, Company Liquidations.
As the law regarding liquidations was considered cumbersome with serious delays in the administration and completion of company liquidations, the relevant law - Companies Law, Cap 113 - was amended in order to iron out such anomalies.
- The majority required for a proposed voluntary arrangement to be binding on all creditors has been lowered from a majority in number representing three quarters in value to a simple majority in value of those voting.
- Only a simple majority is now required for a vote of members to be binding on all members. The sanction of the court is required for any proposal to become effective.
- the minimum debt required for a creditor to petition for winding up on the basis of a statutory demand has been increased from €854 to €5,000;
- compulsory liquidations must be completed within eighteen months from commencement unless the court grants an extension;
- a Liquidator can be appointed by the court as well as by the creditors, and the Official Receiver can be appointed as the permanent liquidator in a compulsory liquidation;
- a Liquidator must be a licensed and regulated professional insolvency practitioner;
- the Liquidator can apply to the court for an order bringing the liquidation to an end and dissolving the company if the assets are insufficient to cover the cost of liquidation;
- a court can make an order authorising the liquidator to dispose of assets subject to a charge if it is satisfied that this would be advantageous.
b) Companies (Amending) Law (No.2) Law of 2015 (EXAMINERSHIP)
o A mechanism for restructuring corporate debt
The above amendment to the Companies Law, Cap 113, has introduced a process called “Examinership”, which is very similar to the administration process in the United Kingdom. This provides for the appointment of a Licensed Insolvency Practitioner as “Examiner”, whose role is to develop restructuring proposals and agree them with creditors and shareholders during a four-month moratorium in which the company is protected from creditor action.
The main purpose of the law is for the Examiner to produce such restructuring proposals so that the Company so that the Company
- can avoid liquidation and
- the creditors will be put in a better financial position than if the company goes into liquidation.
- can continue with its trading activities and staff will continue to be economically employed.
For advice and information please contact
John P Poyiadjis,
all Licensed Insolvency Practitioners.