insolvency review an odce perspective kevin prendergast corporate compliance manager, odce
TRANSCRIPT
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Insolvency review
An ODCE perspective
Kevin Prendergast
Corporate Compliance Manager, ODCE.
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Presentation Overview
• Insolvency and the restriction process
• How ODCE interacts with liquidators
• Current ODCE experience
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Insolvency and the restriction process
• ODCE receives reports on every liquidation
• Liquidator must take restriction proceedings (Section 150 CA1990) unless relieved by ODCE
• Liquidator can choose not to seek relief
• Liquidator can choose to pursue disqualification action
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Insolvency and the restriction process
• Restriction typically lasts for five year period
• Name recorded on register at CRO
• Any company of which they are a director must be adequately capitalised
– Private company €63,487, plc €317,435
– Company limited by guarantee, must resign
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Insolvency and the restriction process
• ODCE acts as filter to relieve Court of duty to examine all insolvencies
• Not relieving liquidator is not a finding of culpability
• Ultimately only the High Court can impose a restriction order
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ODCE and Liquidators
• A joint process– Liquidators must report within 6 months
• Liquidators may be given more time to reach conclusions– Relief at this time
• Open communications
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ODCE and Liquidators• Vast majority of cases we are guided by
liquidators– since 2003, ODCE has accepted recommendations to
grant relief in over 95% of cases
• in the small number of cases where we refused relief when sought, the High Court restricted in 60% of these cases
• since 2003, we have also granted relief in another 2% of cases where the liquidator did not seek relief
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ODCE and Liquidators
• With regard to the conduct of directors in general– we relieve liquidators in respect of 3 out of
every 4 directors– In 2008 91% of cases involved relief from
restriction proceedings– of the 1 in 4 who go to Court, 80% are
restricted or disqualified– in 2007, restricted in 96% of cases heard
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ODCE and Liquidators
• Reasons for not granting relief
• Decision Notice D/2002/3– 5.7 Criteria for Consideration of Reports
• Irresponsibility rather than Dishonesty
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ODCE and Liquidators
– Evidence of trading while insolvent– Level of debts/Revenue– Payment of non-preferential creditors (e.g.
directors)– Failure to keep proper books being a
contributory cause to insolvency– Accumulation of issues
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ODCE and Liquidators
• The successful role of the Office– the 240 cases or so kept out of Court annually
and – the close alignment between ODCE and Court
decision-making
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ODCE and Liquidators
• Law since 2001 has regularised matters for all liquidations
• Some 650 persons now restricted
• Liquidators aware of their obligations
• Dishonest and irresponsible directors sanctioned
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Current ODCE experience
• Reports received from liquidators– Historic low of 273 in 2007– Rose to over 400 in 2008– By end of 2008 running at over 70 a month– Looking at in excess of 700 for 2009
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Current ODCE experience
• Of the notified liquidator appointments in 2008 (596)– Almost 50% were in construction/property– This is broadly in line with 2007 proportions– Notified appointments up 85%
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Current ODCE experience
• Unliquidated insolvent companies– Struck off register for failing to file returns and
owing debts– Office monitors such strike-offs– Directors of such companies can face
disqualification unless they can prove no debts owing
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Current ODCE experience
• Companies have three options– Show evidence of no debts/debts paid off– Re-register companies with CRO, obtaining
audit reports where necessary and paying all fees and penalties (may involve High Court)
– Face disqualification proceedings– 12 directors disqualified, one restricted in 2008
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Further information
• Decision Notice D/2002/3
• Information Notice I/2009/1– Removal of need for subsequent reports after
primary decision
• www.odce.ie
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THANK YOU