Introduction

The proud sporting nations of Ireland and England have for some time traded blows and bragging rights within the Six Nations Tournament as the two pre-eminent and consistent "Home Nations" rugby teams. While the two sides share some similarities in the rebuilding process following the World Cup in France 2023, ahead of this Saturday's clash, few can argue with Ireland's emphatic start to this year's tournament. England, however, can never be written off at Twickenham, so a potential blockbuster awaits!

There are also perhaps more similarities than differences between the key formal corporate insolvency proceedings in Ireland and England. Notably, there is commonality (at least in name) for the terminal insolvency procedure in both jurisdictions – liquidation. In similar vein, the insolvency legislation in both jurisdictions has at its core a formal process whose primary objective is to rescue companies as going concerns. This briefing note summarises the Irish process of examinership and the English process of administration, noting also where the two have interacted cross-border to assist and facilitate one another in seeking to achieve corporate rescue – fortunately, with more collaborative success than two teams facing off on a rugby field.

Examinerships v administrations: a comparison

Examinership is a corporate rescue mechanism for failing companies. It is similar to administration in England but with important differences, including that an examinership is always a court process and begins by the presentation of a petition to court.

In England, administration has three key objectives, the first of which is to rescue the company as a going concern. The second and third objectives focus not on rescue per se, but solely on the company's creditors, either by achieving a better outcome for the company's creditors as a whole compared to the outcome in a winding-up (second objective) or for realising property in order to make a distribution to secured or preferential creditors (third objective). The procedure is primarily governed by the Insolvency Act 1986, Schedule B1 and the Insolvency (England & Wales) Rules 2016. A company can enter administration by either obtaining a court order (the in-Court Route) or by filing documents at court (the out-of-Court Route). While the in-Court Route may be used by all creditors and certain interested parties/stakeholders, the out-of-Court Route may only be used by the company or its directors, and a qualifying charge holder. The out-of-Court Route is often cheaper, faster and more flexible with the appointer having control over when the appointment takes effect. The documents required for both routes are filed at court electronically. Upon the court endorsing the filing, the company subject to the proposed administration will have the protection of an interim moratorium, which becomes a full moratorium as soon as administrators are appointed. The moratorium benefits the company by preventing creditors and other third parties from pursuing claims against the company or its assets.

In effect, the administration process gives the administrators time and space to work out the best way to achieve the elected statutory objective and either reorganise the company or look to realise its assets to pay creditors. The individual(s) appointed to the role of administrator must be licensed insolvency practitioners in England, are officers of the court and therefore are held to a high standard in conducting the administration process. Upon taking office, the administrator's appointment must be widely advertised, and it has a duty to report to creditors on its proposals and the affairs of the company. The powers of the directors to deal with the company's affairs and property cease upon the administrator's appointment. Administration lasts for an initial period of 12 months, but this period can be extended. If the process has achieved the first objective of administration, the company will be returned to its directors as a going concern and the administrator will be discharged. In reality, however, it is not that common to achieve the first objective and the second and third objectives noted above are usually the outcomes achieved by the administrators.

In England, there are several alternative insolvency proceedings that may be implemented, which include the nascent but increasingly popular Companies Act 2006, Part 26A Restructuring Plan, where creditors can agree a restructuring plan to be approved by the court. The longstanding scheme of arrangement is still a well-used and effective proceeding, together with company voluntary arrangements, which we have seen used extensively of late across the leisure and hotel sectors, in particular.

In Ireland, examinership is a fast, court-supervised rescue process that is available to a company (or a group of companies) which is unable or unlikely to be able to pay its debts as they fall due and where the court is satisfied that the company has (or companies have) a reasonable prospect of survival as a going concern. An independent expert must vouch for the company's prospects of survival. Examinership is commenced by petition with standing given to the company, creditors, directors, members and certain financial institutions (with company petitions being the most common). Once presented, it gives the insolvent company (or companies) statutory automatic protection (i.e. a moratorium) from its creditors (including secured creditors) for a period of up to 100 days. When an examiner is appointed (usually an insolvency practitioner), the company remains in possession and control of its business and assets, and the authority and responsibility of directors continues unless executive powers are sought from the court by the examiner. In this regard, it is essentially a "debtor in possession" remedy in which the examiner reviews the company's affairs in order to seek investment and formulate and implement a rescue plan by way of a compromise or a scheme of arrangement in relation to the company aimed to rescue all or part of the failing business. Any such compromise or scheme needs to be approved by a simple majority (in number and value) of one class of creditors which is either senior to the ordinary unsecured creditor class or would otherwise retain an economic interest in the company in a liquidation scenario and confirmed by the court.

Examinerships and administrations in action

Historically, there has been close co-operation between Irish and English courts on insolvency and the insolvency laws in the two jurisdictions are similar, but with some differences. The interaction (and differences) between Irish and UK law in this area is illustrated by the recent examinership of Norwegian Air¹ in late 2020 following a tumultuous year of low sales driven by the Covid-19 pandemic. Norwegian Air had a number of UK debtors and was party to a number of English law contracts and guarantees. The Irish court had to consider whether the English courts would recognise an Irish scheme of arrangement, and the repudiation of English law contracts and guarantees.

In an examinership, a company may seek to repudiate any contract under which some element of performance other than payment remains to be rendered by the company and the other contracting party. There is no direct equivalent in UK administration law. Despite this, the Irish court was satisfied based on two expert opinions from English QCs that the English courts would recognise an Irish examinership proposal for scheme of arrangement which, as part of that process, would include the repudiation of contracts. The opinion stated that English case law showed a broad approach should be taken as to the meaning of what "corresponds" as a matter of Irish law to relevant English provisions. On this basis, the Irish court was satisfied the orders would be enforced by the English courts.

In an earlier case, Re Business City Express Ltd,² in which the company was represented by Dentons' legacy firm Wilde Sapte, a similar approach was taken by the English High Court, which gave effect to an Irish examinership scheme of arrangement in which the court determined that an English court would be likely (if requested) to recognise examinership, and any scheme confirmed by the High Court as part of the examinership, and that an examiner was "roughly equivalent to an administrator in English law". A more recent example of an English court recognising an Irish scheme of arrangement in the context of an examinership is in Silverpail³ where, on 5 April 2023, the English High Court made an order giving effect to the scheme and making it binding on creditors in England and Wales. In both cases, co-operation between the respective insolvency courts was made possible by exercising the rights granted under s.426 of the Insolvency Act 1986. Post-Brexit, this provision has become all the more important between Ireland and England as Ireland is the only EU member state that is designated a "relevant territory" pursuant to the Co-operation of Insolvency Courts (Designation of Relevant Countries and Territories) Order 1986. A further example of the close ties shared by the two nations.

Despite differences between examinerships and administrations, the courts in both Ireland and England have therefore proven to be very facilitative to insolvency practitioners in either jurisdiction when the need arises to call upon the courts to rule on a scheme of arrangement, or another aspect of insolvency law. This remains so, even when clear differences are identified between Irish examinership and English administration law, such as the jurisdiction to repudiate contracts.

If you would like to know more about any aspect of either Irish examinership or English administration, or indeed any other insolvency proceeding within any of our global locations, do please get in touch.

1. [2021] IEHC 268
2. [1997] B.C.C. 826
3. [2023] EWHC 895 (Ch)