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• 1. In a Liquidation, what is the order of creditors and who are such creditors?

  Creditors are ranked as follows in a liquidation process;
  

  • Costs and expenses of the Liquidation
  • Unpaid social security insurance contributions
  • Preferential creditors
  • Floating charge-holders
  • Unsecured creditors

• 2. What is a Directors Estimated Statement of Affairs?

  A Directors Estimated Statement of Affairs is a document which states the Directors estimate of the financial position of a Company as at a date close to the date of Liquidation. It lists all the Company’s assets and liabilities and is presented to the creditors of a Company at a creditors’ meeting. The Estimated Statement of Affairs also compares the book value of the Company’s assets and liabilities against an estimate of their net realisable value in a liquidation situation.
  

• 3. Are all creditors of the Company invited to the creditors meeting?

  It is the Directors duty to notify all creditors of the Company, as per the books and records, of the meeting. Each creditor should receive a notice informing them of the meeting together with two proxy forms at least ten days prior to the meeting.

• 4. What is a proxy form? Why are there two?

  A creditor will receive two proxies, a general proxy and a special proxy, once a meeting of creditors has been called. A proxy is a person nominated by the creditor to attend the meeting and exercise the creditors vote on their behalf. The creditor can nominate the chairman, a legal representative to speak on their behalf or alternatively they can attend the meeting themselves. In this instance, a general proxy is completed.
  
  A special proxy is used when the creditor wishes to accept or reject a resolution. It is rarely used and it is not a legal requirement to send this form.

• 5. Who appoints a liquidator and when does the appointment occur?

  Typically when a creditors meeting has been called, the Directors of the Company will have previously nominated a liquidator. At the end of the meeting, creditors have the opportunity to either appoint the nominated liquidator or put forward an alternative nominee to act as a liquidator.
  
  The vote for the appointment of a liquidator is based on the total number of votes received based on a value basis from the creditors who have completed and filed their proxy forms in order and on time.

• 6. What are the formalities at a Creditors Meeting/ Do I as a Creditor have an opportunity to ask the Directors questions?

  All participants will be requested to sign in to the Creditors Meeting and will receive a Statement of Affairs of the Company. The meeting is usually chaired by a Director of the Company and in some cases assisted by the Company’s solicitor.
  
  The meeting is usually convened by the Chairman outlining the agenda of the meeting. Typically the Director reads out a statement outlining the reasons for the collapse in the Company. Creditors then have time to ask the chairman questions.
  
  Once all questions have been addressed the vote for the appointment of the Liquidator takes place as per Question 5.

• 7. What is a Committee of Inspection?

  A Committee of Inspection is set-up to assist the Liquidator during the course of their work and to approve any proposal they put before them at regular meetings.
  
  Members of the Committee are elected to serve on the Committee at the Creditors Meeting. A Committee of Inspection must have at least 3 members and a maximum of 5.
  
  Meetings of this Committee are generally held immediately after the Creditors Meeting and at regular intervals as required. No monetary compensation is received for carrying out this role.

• 8. My employer has gone into liquidation, what should I do? What am I entitled to?

  Upon his/her appointment, the liquidator and his/her staff will contact all employees. Each employee will be asked a number of questions about their employment and may be asked to complete a questionnaire.
  
  The liquidator will also keep the Company’s books and records to check what the employees are owed. Forms in respect of outstanding entitlements due to them are posted to all employees for signature before sending them into the Department of Enterprise, Trade and Employment.
  
  For more information on these forms and your entitlements, please click on the link below:
  http://www.entemp.ie/employment/redundancy/faq.htm

• 9. A Company owes me money, can I petition to place it in Liquidation and what is the process?

  Any creditor of a Company can petition to wind-up a Company provided their debt is in excess of the High Court limit of €1,269.74. The process of petitioning to wind-up the Company is dealt with under Section 214 of the Companies Act.
  
  Under this act it must be proved that the Company cannot pay their debts as they fall due. In order to prove this, a Creditor must issue a 21 day letter of demand to the Company’s registered office. Failing the discharge of the debt during this period, this can be const as proof that the Company is unable to pay its debts.
  
  The hearing of the petition should also be advertised in the National Press by the petitioner. The cost of such a petition is quite significant however this cost ranks in priority of all other costs and liabilities should a dividend payment be available.

• 10. What is an Examinership?

  An Examinership is a process whereby a Company can be placed under the “protection” of the High Court from its creditors while its affairs are restructured.
  
  Where a Company is placed in examination, the examiner:
  

  • Considers whether the Company has a reasonable prospect of survival and is capable of rescue and, if so,
  • Formulates a proposal for investment in the Company and brings forward a scheme of arrangement for approval by the Company’s creditors and the high court.

• 11. I am a creditor of a Company that is in Examinership, what happens to my debt?

  If your debt was incurred with the Company prior to the date the Company was placed into examination and the High Court does not view this payment as being essential for the continuing survival of the Company your debt will be ranked as an unsecured creditor. Throughout this period of protection legal proceedings seeking payment for any debt may not be taken by any creditor against the Company.
  
  As part of the examination process a scheme of arrangement is completed by the examiner. The Scheme of Arrangement is a proposal between the Company and its Creditors for historical debts and usually includes clauses for any future trading between the parties.
  
  Typically in Examinations only a percentage of the debt outstanding is paid and the balance is written-off by means of a High Court order.
  

• 12. What happens if I supply goods to a Company during the Examination period?

  During the Examinership period all goods supplied to the Company are paid on a cash on delivery basis or under very short credit terms to be agreed between the supplier and the Company. However goods supplied prior to the Examination date are treated in the same manner as per question 11.

• 13. What does appointing a Receiver mean?

  When a borrower has defaulted on a loan, a receivership is a method by which a mortgage or charge holder (usually a financial institution) will appoint a receiver to attempt to recover the outstanding borrowings.
  
  A receiver has the duty to:
  

  • Secure the asset(s) of the Company
  • Realize the asset(s), and/or
  • Manage the affairs of the Company with a view to maximising the return to the charge holder.

• 14. Can I make an application to be declared bankrupt and what is the process?

  An individual can make themselves Bankrupt in Ireland however once declared Bankrupt you will remain so indefinitely unless you make an application to the Courts 12 years after the initial bankruptcy declaration.
  
  Any person that wishes to make an application must file a petition with the High Court. This document sets out the nature of all debts that you have. A declaration will also be submitted with the petition stating that you will advertise and attend the court hearing and that any expense of the Official Assignee that the court instructs you to pay will be paid.
  
  A Statement of Affairs will also have to be signed and sworn which states all the property, cash and items of any value that are in your possession and a list of all people that you owe money to.

• 15. What are the consequences of being declared Bankrupt?

  The following are the consequences of being declared bankrupt:
  

  • You cannot act as a Director in a Company without court approval.
  • At the Court decision part of your salary or pension may be deducted to pay creditors
  • Your credit rating will be severally affected and obtain credit may be very difficult
  • Your name will be placed onto the Bankruptcy Register held at the Examiner’s Office and will remain on it even after discharge
  • Any inheritance that you receive will be used to pay creditors

• 16. How do I advertise on InsolvencyJournal.ie?

  Should you wish to advertise your Company or business on InsolvencyJournal.ie, please contact Edel Ryan on info@insolvencyjournal.ie

• 17. How often is InsolvencyJournal.ie updated?

  The website is updated daily and you can also subscribe to their weekly newsletter on the following link: http://www.insolvencyjournal.ie/email_updates.aspx

• 18. What are the main differences between a Court Liquidation and a Creditors Voluntary Liquidation?

  The main difference between a Court Liquidation and a Creditors Voluntary Liquidation are as follows:

  • There is no meeting of creditors to wind up the Company in a Court Liquidation
  • The ten days statutory notice under a Creditors Voluntary Liquidation is not required under a Court Liquidation
  • A Committee of Inspection is only appointed in a Court Liquidation should the Court believe that there is a need for one and it instructs the Liquidator to call a meeting of creditors to appoint one.
  • There is no requirement to complete a Statement of Affairs under a Court Liquidation.
  • Throughout the Court Liquidation the Liquidator is required to complete a report to the Court on the key issues arising in the case and seek the Courts approval on significant decisions.

• 19. What should I do if I find my Company is unable to pay its debts as they fall due?

  If as a Director of a Company you believe that the Company is unable to pay its debts as they fall due you should:
  

  • Consult with your auditor/accountant and carry out a full review on the financial position of the Company
  • Discuss the options available to the Company with an experienced insolvency practitioner

  In some circumstances Directors found to be trading a knowingly insolvent Company can be found to be subject to claims that they were in misuse of their powers as a Director and may in some cases be subject to Section 150 proceedings under the Companies Act 1990. It is strongly recommended that any Director who feels that their Company may be in an insolvent position should immediately contact one or both of the above parties.

• 20. What is the role of the Office of Director of Corporate Enforcement in a Liqudiation?

  Typically the role of the Office of Director of Corporate Enforcement in both a Court Liquidation and a Creditors Voluntary Liquidation is as follows:
  

  • The supervising of Liquidators to insure that they properly discharging there authority.
  • Assessing the conduct of all Directors of an insolvent Company through the report completed by the Liquidator under Section 56.
  • Deciding given all information available to them if a Director has acted honestly or fraudulently throughout the trading life of the Company.
  • Instructing Liquidators to commence proceedings for restriction a Director under Section 150 of the Companies Act 1990 who they believe have acted fraudulently.