knowledge 17 July 2023 |

Irish Examiner appointed to Northern Irish registered company in a precedent setting court decision

On 30 May 2023, the Company, a private limited company incorporated and registered in Northern Ireland, but with its COMI in Ireland, presented a petition seeking the appointment of an examiner. On the same day, at the hearing for the appointment of an interim examiner to the Company, Mr Justice Dignam made orders, amongst other things, appointing Kieran Wallace of Interpath Advisory as examiner on an interim basis pending the hearing of the Petition.

At the petition hearing on 14 June 2023, Mr Justice Quinn, satisfied that the Irish High Court had jurisdiction to open main proceedings for the purposes of Article 3(1) of the Insolvency Regulation¹ and that the Company’s COMI was in Ireland, made orders, inter alia, appointing the Interim Examiner as Examiner of the Company pursuant to s 509(1) of the Companies Act 2014 (the “Act”). The issues of jurisdiction and COMI were considered by Mr Justice Quinn’s in his judgement of 11 July 2023 and are further elaborated on below.

Jurisdiction

The Court, for the first time, made orders appointing an examiner to a foreign registered, non-EU company. In making the orders, Mr Justice Quinn noted that he had jurisdiction to appoint the examiner on the basis that, notwithstanding that the Company did not meet the definition of a ‘company’ under section 2(1) of the Act, being a company formed and registered in Ireland, the Act was to be read in light of the provisions of the Insolvency Regulation given the regulations’ direct application in Ireland. This is further bolstered by the fact that section 508(2) of the Act expressly provides that Part 10 of the Act “…is subject to the Insolvency Regulation”, eliminating any doubt as to the Insolvency Regulations’ direct application. Member States have both a negative obligation to ensure that domestic legislation does not contradict the Insolvency Regulation, but also a positive obligation to ensure that the Insolvency Regulation is applied in practice. Article 3.1 of the Insolvency 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 centre of main interests shall be the place where the debtor conducts the administration of its interests on a regular basis and which is ascertainable by third parties.’ Accordingly, Mr Justice Quinn accepted that Article 3(1) of the Insolvency Regulation conferred on the Irish courts the power to open insolvency proceedings in respect of a debtor whose COMI is in Ireland, regardless of its place of incorporation.

By contrast, the jurisdiction of the Irish Court to extend the appointment of an Examiner to a ‘related company’ is set out in section 517 of the Act, which allows the appointment to extend to companies incorporated and registered outside of the State. This was the basis upon which the Norwegian registered parent company (Norwegian Air Shuttle ASA) was brought under the protection of the court in the Norwegian Air Examinership².

Justice Quinn, in accepting jurisdiction to open main insolvency proceedings relied on the decisions of: (i) Re BRAC³, a decision of the English Courts which permitted the making of an administration order for a Delaware registered company, with its COMI in England; and Re Harley Medical Group⁴, wherein Ms Justice Laffoy found that by reason of the direct effect of Article 3(1) of the Insolvency Regulation,  the Irish courts had jurisdiction to make winding up orders in respect of a British Virgin Island registered company, but with its COMI in Ireland ‘the High Court in this jurisdiction has jurisdiction to open insolvency proceedings, which are main insolvency proceedings, in accordance with para. (1).’

Mr Justice Quinn noted that the decision in Re Harley Medical Group when taken ‘together with s.508(2) which clearly extends the application of the Regulation to Examinership proceedings, this jurisdiction extends to the appointment of an Examiner’.

COMI

Having accepted jurisdiction to open insolvency proceedings, Mr Justice Quinn was then required to examine the evidence relied upon to demonstrate that the Company had its COMI in Ireland. The presumption that a company’s COMI is its place of incorporation can be rebutted. In Re Eurofood IFSC⁵, it was established that the presumption that a debtors centre of main interests was the place of its registered address could be rebutted “only if factors which are both objective and ascertainable by third parties enable it to be established that an actual situation exists which is different from that which locating it at that registered office is deemed to reflect.”

Mr Justice Quinn noted that the evidence before the Court on this application was contained in the petition, verifying affidavit, Independent Expert’s Report and a supplemental affidavit. These factors included, amongst others, that:

• the Company registered a branch in Ireland more than 20 years ago;
• the Company’s administrative and marketing headquarters are in Dublin;
• with some exceptions, all physical board and management meetings are held in Dublin;
• the Company is tax resident in Ireland;
• the Company has had a substantial business presence in the fit out market in Ireland for in excess of 20 years;
• approximately 66% of the Company’s creditor base by value and 65% in number are based in Ireland; and
• all of the Company’s 41 employees are resident in Ireland and work from the Company’s office in Dublin or on sites throughout Ireland.

Quinn J. found that, based on the above factors, 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 conclusion, Mr Justice Quinn noted that he was satisfied that the Irish Court had jurisdiction to open main insolvency proceedings, that the Company’s COMI was in Ireland and that the pre-conditions to the appointment of an Examiner had been met and accordingly, exercised his discretion to appoint an Examiner to the Company.

The decision is the first of its kind in Ireland and confirms the position that a foreign registered, non-EU based company, with its COMI in Ireland, may be the subject of Examinership proceedings under Part 10 of the Act.