Court of Appeal dismisses creditor's objection to merger by absorption of Bank of Ireland Private Banking with the Governor and Company of the Bank of Ireland
Court of Appeal dismisses creditor’s objection to merger by absorption of Bank of Ireland Private Banking with the Governor and Company of the Bank of Ireland
In a decision handed down on 5 December last, the Court of Appeal (Irvine J, Whelan J and Baker J) has dismissed an appeal brought by a creditor of Bank of Ireland Private Banking (BOIPB) against a merger, in which A&L Goodbody was involved, of BOIPB with the Governor and Company of the Bank of Ireland (BOI).
The appellant, John Kelly, appealed against an order of the High Court confirming the merger which took place in 2017 between BOIPB and BOI pursuant to s.1141 of the Companies Act 2014 (the Act). The proposed merger was one of absorption, in which BOI, the transferee, was already the owner of all shares of BOIPB. The result of the merger would be that all rights, obligations and liabilities of BOIPB would vest in BOI, and BOIBP would dissolve without going into liquidation.
The appellant had commenced proceedings against BOIPB in relation to a property in Stockholm, Sweden, which, if successful, would result in BOIPB having a significant liability to him in damages. The appellant argued that the respondents did not provide sufficient documentation to satisfy the Court as to the financial position of BOI, as required for the Court to approve the merger under Chapter 16 of Part 17 of the Act, and that the Court could not be satisfied that his position as a creditor would not be prejudiced by the merger.
Rights of creditors to object to a merger
The merger was effected under Chapter 16 of Part 17 of the Act, which governs mergers where each of the merging companies, or one at least, is a PLC. Under s.1142 of the Act, any creditor wishing to object to the merger must be in a position, as required by s.1142(1)(b), to credibly demonstrate that the proposed merger would be likely to put the satisfaction of their debt or any claim they may have against either merging company at risk, and that no adequate safeguards had been obtained from the acquiring company to obviate that risk. Only if the creditor meets that threshold does their individual position need to be addressed by the Court when considering the merger under s.1144.
Decision of the Court of Appeal
In delivering the judgment of the Court of Appeal, Irvine J held, in dismissing the appeal, that the High Court judge acted in a fair and just manner in dealing with the case, and that the appellant could not satisfy the requirements of s.1142(1)(b) of the Act, as he had not credibly demonstrated that the proposed merger would be likely to put the satisfaction of his debt or claim against BOIPB at risk. Therefore, the appellant was not entitled to object to the merger, and no consideration had to be made as to whether proper provision had been made for him or any other creditor. Irvine J concluded that all the requirements of Chapter 16 had been met and considered by the trial judge, and that the merger had therefore been properly confirmed.
Irvine J further ruled that the High Court, in confirming the merger, was not required to specifically state in its ruling that the Court was satisfied that all the requirements of Chapter 16 of Part 17 of the Act had been met.
Irvine J also delivered some particularly forceful comments about certain remarks said to have been made by Counsel for Mr. Kelly, to the effect that, while Counsel indicated in submissions to the Court of Appeal that he made no criticism of the High Court judge, this was in Irvine J's view "far from what occurred", and that it had been alleged that the High Court judge had failed to scrutinise or analyse the application, and that what he did was no more than to "rubberstamp" the application- allegations which, in Irvine J's view, were unsupported by the evidence and which were therefore rejected.