A previously unsettled aspect regarding the High Court’s (Court) jurisdiction to appoint an examiner to a company which is not formed or registered under the Companies Act 2014 (2014 Act), has been considered in the recent case of In the matter of MAC Interiors Ltd  IEHC 395.
The judgment of Mr Justice Quinn, for the first time confirms the Court’s jurisdiction to appoint an examiner under Section 509 of the 2014 Act, in main proceedings in accordance with Article 3.1 of the EU Insolvency Regulation Recast, EU 2015/848 (EIR Recast) which has direct effect in Ireland.
This was the first time the High Court had to consider a petition under section 509 of the 2014 Act, to appoint an examiner, where the company was not formed and registered under the 2014 Act, or an existing company incorporated in the State. The applicant company therefore invoked the direct application of Article 3.1 EIR Recast
The company at the centre of this case, Mac Interiors Limited (MAC), had its registered office in Newry, Co Down, Northern Ireland. It presented a petition to the Court for the appointment of an Examiner. Notwithstanding that MAC was not incorporated in the State, it argued that MAC’s centre of main interests (COMI) was Ireland for the purpose of the EIR Recast and the Court should make an order appointing an examiner. To succeed, MAC had to rebut the presumption under EIR Recast that its COMI is the location of its registered office.
The Court noted that as MAC was not formed and registered under the 2014 Act, ostensibly, section 509 did not apply. However, EIR Recast has direct effect in Ireland, and furthermore Part 10 of the 2014 Act (on examinership) is expressly subject to EIR Recast. Article 3.1 of EIR Recast provides that courts of a member state within the territory of which the COMI have jurisdiction to open insolvency proceedings.
Mr Justice Quinn was satisfied on the evidence that the presumption that MAC’s registered office in Northern Ireland was its COMI, was rebutted. In so finding, Mr Justice Quinn identified several factors in support of the finding that MAC’s COMI is in Ireland, including:
- MAC’s administrative and marketing headquarters is located in Dundrum, Dublin,
- Physical board and management meetings take place in the Dublin office,
- MAC registered a branch in Ireland in 2000,
- MAC is Irish tax resident and files tax returns in Ireland only,
- MAC has a substantial business presence in Ireland for over 20 years and carries out most of its trade in Ireland,
- Approximately 66% of MAC’s creditor base by value (65% in number) is based in Ireland,
- All of MAC’s 41 employees are resident in Ireland and work from its Dublin office or on other sites located throughout Ireland and have Irish law governed contracts of employment,
- MAC’s banking and administrative functions are carried out from the Dublin office,
- MAC banks with Bank of Ireland and has an Irish bank account,
- Whilst several English contracts were subcontracted to MAC’s English registered subsidiaries, importantly, the main contracts are with MAC.
Mr Justice Quinn noted that the evidence presented demonstrated that third parties, notably creditors, regard Dublin as the centre from which MAC trades and from where its affairs are administered. In the circumstances, the court had jurisdiction to appoint an examiner as the conditions set out in Section 509 of the 2014 Act were met. He made an order appointing Mr Kieran Wallace of Interpath as examiner.
The judgment provides a succinct overview of the implications of the direct effect of EIR Recast in Irish insolvency proceedings and the rebuttal presumption as to a company’s COMI. It demonstrates the ability and willingness of the Irish courts to effectively deal with insolvency proceedings of companies incorporated outside the State. The judgment will further bolster the already well-established effectiveness and flexibility of the examinership system in Ireland.