Recent case law has investigated and sought to deal there exists no - PowerPoint PPT Presentation

1. CERTIFICATION OF LIABILITIES The Issue from Revenue’s point of view is that, in EXAMINING EXAMINERS EXPENSES practice, before Revenue will consent to a company The question of what liabilities can be certified as being put into Examinership, it will require an Any analysis of the law relating to Examinerships expenses in an Examinership would appear from the undertaking in respect of taxes and returns being kept must start with the primary legislation, being the Act to be quite straight forward. However, recent up to date and duly paid. That undertaking is given by Companies Act, 2014, as amended (“the Act”) . cases suggest that this is not necessarily the case. the Company being placed into Examinership, not the The relevant portions of the Act were largely a Examiner. In practice, if the company defaults, Increasingly, third parties, in particular the Revenue restatement of the law as was contained in the depending on the scale of certified costs/expenses Commissioners, have sought to have certain previous body of Company Law Acts. Revenue has an exposure in a failed Examinership, liabilities owed to it certified, where those liabilities and can end up out of the money would not immediately appear to fall within the From an Examiner ’ s point of view, for the purposes statutory definition. of this briefing the important sections of the Act are Harley Mechanical Services Limited & The those dealing with Exami ner’s costs : Companies Act (2018) Under s529 the liabilities must be certified: Initially, the Court found that P30 expenses could and THE COMPANIES ACT 2014 1. during the protection period; should be certified as expenses in an Examinership 2. in writing; Section 529 – Certification of Costs; under section 529. However, on appeal, the Court 3. at the time they were incurred; and ruled: 4. on the basis of the Examiner’s opinion that Section 554(1) – Application for Costs; not certifying such liabilities would seriously “It is clear that the court may scrutinize the Section 554(3) – Ranking of Costs; and prejudice the survival of the Company during bases on which the Examiner certifies. But the Sections 509 & 518 – Costs of Group the protection period. Court has no express jurisdiction under Part Examinership. 10 of the Act to deem liabilities as having the RECENT CASE LAW status of certified expenses and in my view Recent case law has investigated and sought to deal there exists no standalone power to deem Examiner’s Costs with the question of what costs/expenses are and certain liabilities to be expenses in the can be properly certified under section 529 of the Act. Examinership and entitled therefore to special In large part, the case law has developed on foot of statutory authority. ” 1. Certifiication of Liabilities; attempts by third parties (primarily, it has to be said, 2. Application for Costs; The Court can scrutinise what the Examiner does the Revenue Commissioners) to have their costs, certify, but cannot force an Examiner to certify 3. Ranking of Costs; and expenses, and liabilities certified. liabilities. 4. Costs of Group Examinerships.

2. APPLICATION FOR COSTS An application for costs under section 554 is an A number of cases decided by the Courts have application on notice to other parties. Typically, at focussed on the question of what amount to An Examiner must apply for Court approval of their the hearing of the application by the Examiner to reasonable costs for the purposes of Section 529. costs whether an Examinership is successful and bring the Examinership to an end, interested parties The principles decided in Examinership cases are the company exits the Examinership process with an will make themselves known to the Court and seek often cited with approval by the Courts in cases agreed Scheme of Arrangement, or whether the to be put on notice of the Exam iner’s section 554 Examinership fails and the company goes relating to costs of Receivers and Liquidators and vice application. immediately into Liquidation. versa. If you would like to receive a detailed report on or In practice an Examiner will frequently try to deal The application is brought by notice of motion, access to any of the cases mentioned here, please with the issue of their costs with the other interested grounded on an affidavit by the Examiner in which parties in a failed Examinership in the hope of email bconroy@leman.ie. the Examiner will exhibit their final report, and set making an application on consent in respect of their out a breakdown of the precise costs they are Swift Structures Ltd & Euro Plant Hire Ltd v costs. It will still be for the Court to assess and seeking under section 554. Companies Acts (2017) determine whether the Examiner’s costs are Though this particular case involved a liquidation, it is appropriate, but the Court will likely draw strong Pierce Farrell (official liquidator) v. Plastronix relevant in the context of Examinerships, where a 3 rd inference from an application being on consent. investments limited – 16 march, 2018 party funder will often fund the Examinership, and will Section 554(1) want or expect an arrangement with the Examiner in "Since the delivery of the judgment in re Sharmane relation to both the Examiner’s costs (which they will The court may from time to time make such orders ltd., it has been clear that the court, in determining as it thinks proper for payment of the remuneration effectively be paying) and safeguarding of their the remuneration of persons appointed as investment and costs of, and reasonable expenses properly Examiners, administrators or official liquidators, will incurred by, an Examiner . not determine the reasonable remuneration by “It was argued that as the court's jurisdiction to make reference only to the total charge-out costs a payment out of assets cannot be exercised, and as Section 554(2) computed from the hours spent and relevant hourly the Revenue Commissioners had a contractual Unless the court otherwise orders, the rates, but will also have regard to: arrangement with the liquidator in relation to the remuneration, costs and expenses of an Examiner 1. The nature of the work carried out; funding of this liquidation, the court has no role under shall be paid and the Examiner shall be entitled to 2. the complexity of the work; and section 228. Instead, it was suggested, the liquidator if be indemnified in respect thereof out of the revenue 3. the importance or value of the work ‘to the aggrieved could have recourse to judicial review or of the business of the company to which he or she client’.” could sue the Revenue Commissioners for damages has been appointed, or the proceeds of realisation for breach of contract. In my view this contention is of the assets (including investments). incorrect. ”