Company Insolvency Law
If you are running an insolvent company in Ireland you are putting your reputation and right to hold the position of Director of a company at serious risk. The test for insolvency in this jurisdiction is that ‘your company must be able to pay its debts as they fall due’. If the answer to this question having regard to your company is ‘NO’ or ‘I’m not sure’, then we would strongly suggest that you contact your accountant or legal adviser immediately.
If you continue to run your business when it is insolvent (whether you know it or not) and the company is wound up, then you could be putting yourself at serious risk in accordance with insolvency law in Ireland. In instances where an insolvent company is wound up the Directors of that company can be restricted or even disqualified from acting as Directors of any company in the future.
This is one of the situations where not just the company but the Directors individually, can be held personally liable for their actions. This could lead to you being unable to run or be involved in the management of another company and/or to you having to assume personal liability to pay or repay monies.
You should contact CB Robinson Business Solicitors if you feel your company is trading while insolvent and together we can examine the options open to you. Depending on your particular circumstances you may wish to have either an Examiner or a Liquidator appointed over your company.
Having an Examiner appointed over your business is a step in a process designed to save failing companies. If your company has a reasonable prospect of success, applying to Court to have an Examiner appointed may relieve some short term pressure and allow your company to trade its way out of its difficulties. If, however, your company is beyond the point of saving, a business decision should be made to liquidate the company.
If you have any concerns about the solvency of your company, contact us today.
So having taken advice you decide to cease trading and close your company. This is what we call winding up the company.
Directors’ duties to the Liquidator
The directors and other officers of the company have statutory duties to assist the liquidator in the performance of his duties.
Liability of Liquidators
Liquidators are agents of the company and not generally, personally liable. But, they must act in good faith. They will be potentially personally liable if there is fraud or personal misconduct or negligence on their behalf.
Payment of the Liquidator
The expenses and fees of the liquidator are paid out of the realised assets. In voluntary liquidations, the creditors, or the committee of inspection, if appointed will fix it. In a Court liquidation, the court fixes the payment based on what is a ‘fair fee’. This will be determined by the number of staff and hours worked, etc. It is often the practice to appoint a creditor to review the charges and express a view to the court.
Director’s duties to Creditors
It is important to note that while a director’s duties are normally to the company, as a company moves to insolvency, the courts have held that the directors’ duties also move towards the creditors.
We will be happy to assist you with any aspect of a Company insolvency, whether you are a Director, shareholder or creditor.