‘Important’ High Court decision on insolvency
Lawyers at Philip Lee have described a recent High Court decision as “an important post-Brexit development for cross-border insolvency in Ireland”.
They were commenting on the court’s recent recognition and enforcement, in a post-Brexit context, of an Individual Voluntary Arrangement (IVA) that was agreed in the North.
An IVA is a statutory debt-resolution mechanism that, once approved, can bind creditors to its terms and may operate as an alternative to bankruptcy.
The IVA nominee/supervisor, Séamas Keating, applied to the High Court so that the IVA could be recognised and enforced in Ireland in circumstances involving an Irish connection.
The High Court also enforced a stay restraining creditor action pending completion of the IVA.
‘Developing’ Irish approach
In a note on the firm’s website, the Philip Lee lawyers note that the application arose in the post-Brexit landscape, where the automatic-recognition regime under the Recast EU Insolvency Regulation no longer applies to UK proceedings started after the end of the transition period.
The lawyers say that the decision forms part of a developing Irish approach to cross-border insolvency outside the EU Insolvency Regulation framework, grounded in inherent jurisdiction/common law and, in related authorities, an “equivalence” analysis.
The central issue in the case was whether, and on what basis, an IVA approved in the North could be recognised and enforced in Ireland in the absence of an automatic statutory recognition route.
“It is also noteworthy that Re Keating concerns personal insolvency rather than corporate insolvency,” Philip Lee notes.
Administration proceedings
“In the absence of a written judgment, the precise equivalence analysis is not yet clear; however, any assessment would naturally engage Irish personal-insolvency mechanisms under the Personal Insolvency Act 2012.”
The firm’s lawyers note that the court’s decision is consistent with the High Court willingness, in appropriate cases, to use inherent jurisdiction/common law to assist foreign insolvency processes.
They also note that the High Court also recognised the North’s administration proceedings on a similar inherent jurisdiction/common-law footing in Re Mercer Agencies, “illustrating an emerging post-Brexit pattern of Irish courts providing ‘in aid’ recognition where there is a legitimate cross-border purpose and sufficient equivalence”.
‘Furthest an Irish court has gone’
Philip Lee says that, where a debtor has assets or enforcement exposure in Ireland and the North, creditors should anticipate that an IVA may be capable of being made effective in Ireland.
Its lawyers add that debtors seeking a stable restructuring outcome across the border may be able to use court recognition to ensure that an IVA delivers practical protection in Ireland as well as the North.
“For insolvency practitioners, the decision supports a pragmatic route to cross‑border recognition in suitable cases outside the EU Insolvency Regulation framework,” the analysis states.
The lawyers conclude by describing Re Keating as “the furthest an Irish court has gone in recognising and enforcing foreign insolvencies outside of the European insolvency-regulation regime, by not only recognising, but enforcing the substantive terms of a foreign personal-insolvency arrangement and granting an associated stay”.