Examinership extended to company incorporated outside Ireland

Mac Interiors Limited (the Company), a Northern Ireland-incorporated company, has become the first company incorporated outside the Irish State (and the EU) to have an examiner appointed under the examinership regime provided for in section 509 of the Companies Act 2014 (the 2014 Act).

The appointment was made by the Irish High Court on the basis that the Company’s "centre of main interests" and employee base was in the Republic of Ireland (Ireland).

Background

The Company experienced financial hardship, predominately resulting from the COVID-19 pandemic and it sought the appointment of an examiner in Ireland, on the basis that the Company’s centre of main interests and employee base was in the Republic of Ireland.  The petition was made pursuant to section 509(1) of the 2014 Act in accordance with Article 3(1) of the EU Recast Insolvency Regulation (EU)2015/848 (the Insolvency Regulation).

The Company, being incorporated outside the State, was not a "company’"within the meaning of section 2(1) of the 2014 Act, so it invoked the direct application of Article 3(1) of the Insolvency Regulation.

No party opposed the examinership petition and no creditor, including the Revenue Commissioners, objected to the appointment of the examiner.

Jurisdiction

At the initial hearing for directions in the High Court in May, Dignam J appointed an interim examiner to the Company pending the hearing of the petition. On 14 June 2023, when the petition was heard, Quinn J confirmed the appointment of the examiner, being satisfied that the High Court had jurisdiction to appoint an examiner to the Northern Ireland-incorporated company on foot of its own petition, despite it being incorporated outside the EU.

Quinn J noted that the 2014 Act (expressly stated in section 508(2)) is subject to the provisions of the Insolvency Regulation, in particular to Article 3(1), which confers jurisdiction on the Irish courts to open main insolvency proceedings in respect of a debtor with its "centre of main interests" in the State, regardless of its country of incorporation.

Article 3(1) states: "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."

Article 4(1) states: "A court seised of a request to open insolvency proceedings shall of its own motion examine whether it has jurisdiction pursuant to Article 3. The judgment opening insolvency proceedings shall specify the grounds on which the jurisdiction of the court is based, and, in particular, whether jurisdiction is based on Article 3(1) or (2)."

Referencing the cases of Re Harley Medical Group (Ireland) Limited [2013] IEHC 219 and Re BRAC Rent-a-car International Inc [2003] EWHC 128 (Ch), the direct effect of the Insolvency Regulation was applied to the Company.  Quinn J held that, "[t]aken together with s. 508(2) which clearly extends the application of the [Insolvency Regulation] to examinership proceedings, this jurisdiction extends to the appointment of an examiner".

Centre of main interests

The High Court had to determine whether the Company had its centre of main interests in the State, within the meaning of that term for the purpose of the Insolvency Regulation, and if the Company had rebutted the presumption against Northern Ireland being the centre of main interests of the Company (being the location of its registered office).

Referencing the case of Re: Eurofood IFSC (Case No 341/04), the High Court held that the presumption against the location of the registered office being the Company’s centre of main interests was rebutted based on the information furnished by the Company, which included: 

  • the Company’s administrative and marketing headquarters was in Ireland
  • substantially all physical and board management meetings took place in Ireland
  • the Company was tax resident in Ireland
  • the Company carried out most of its trade in Ireland
  • all of the Company's 41 employees are resident in Ireland

The Court found that "[t]he evidence presented demonstrated that third parties, notably creditors, regard Dublin as the centre from which the Company trades and where its affairs are administered". Quinn J was satisfied from the evidence presented that the presumption in favour of the location of the registered office being the centre of main interests had been rebutted by the Company and the Company had proven that its centre of main interests is Ireland.

The key point of interest in this case is the Court's ruling that it had jurisdiction to appoint an examiner to a company incorporated outside of the State or the EU. This was “a significant and previously undecided point regarding the jurisdiction of the court to make the appointment” and the first time that a Company incorporated outside of the jurisdiction has petitioned for examinership on the basis that their centre of main economic interests is within the jurisdiction.

Whether further applications will now follow is awaited with interest.

For more information in relation to this topic, please contact Michelle McLoughlin, Knowledge Consultant, Liam Murphy, Senior Knowledge Lawyer,  Anne O’Neill, Senior Knowledge Executive or any other member of ALG’s Corporate and M&A team.

Date published: 25 July 2023