These are the same:
1. The powers of the examiner (Section 524).
2. The ability of the examiner to repudiate contracts made before the protection period, and to repudiate negative pledge clauses (Section 525).
3. The duty of officers of the company to produce documents and evidence to the examiner.
4. The rule that no person is entitled to a lien over the company’s books, records, etc, as against the examiner (Section 527).
5. The power of the Court to vest all the functions of the directors in the examiner (Section 528).
6. The rule that any liabilities incurred by the company during the examinership – which the examiner certifies as having been necessary for the survival of the company – will be treated as expenses properly incurred (Section 529).
7. The power of the Court to authorise the examiner to dispose of company property which is subject to a floating charge (Section 530).
8. The examiner may appoint a credit committee of not more than five members to help him perform his duties (Section 538). The committee must include the holders of the 3 largest unsecured claims who are willing to serve.
A petitioner must give the Registrar notice of the petition, within 3 days of its hearing (Section 531).
If an examiner is appointed, he must publish a notice to this effect in the CRO Gazette and in 2 daily newspapers. He must also give the CRO a copy of the order appointing him.
The company’s invoices, business letters, emails, website, etc, must state that it is “in examination”.
Provision for the resignation, removal, replacement, etc, of examiners can be found in Section 532; this information was previously contained in Section 13 of the C(A)A 1990.
If irregularities in the company are uncovered – such as substantial disappearance of company property – the Court will hold a hearing as soon as possible to consider the evidence. This is provided for in Section 533.
The Court may ask the examiner to write a report on these irregularities (Section 533(2)).
The provisions on the formulation of a scheme of arrangement are no different, and can be found here (Section 543). This is the old Section 18 of the C(A)A 1990.
• As soon as the examiner is appointed, he must formulate proposals for a scheme of arrangement or a compromise.
• These must be put to the company’s creditors and members.
• The examiner must report back to the Court within 35 days.
• The Court may extend the time period.
If the examiner is not able to secure agreement from the creditors and members, then Section 535 applies. The Court may make directions, or it may wind the company up.
Exactly what should be contained in the Examiner’s Report is listed here (Section 536).
The essential details to be included in the compromise or scheme of arrangement are set out here (Section 539). As before, the examiner must attach to the proposals a projection of what the outcome for the company’s members and creditors would be if it were to be wound up instead.
A creditor’s claim against a company is impaired if the creditor receives in payment of his claim, less than the full amount due at the date of the petition.
The rules with regard to voting and convening meetings which must be obeyed when creditors and members are consulted on proposals are set out here (Section 540), and derive from Section 23 of the C(A)A 1990.
The examiner’s scheme of arrangement report must be set down for consideration by the Court as soon as possible after the Court receives the report. This Section 541, is a re-enactment of Section 24 of the C(A)A 1990 (as is the section which follows it, Section 542).
The Court must be satisfied that:
• At least one class of impaired creditors has accepted the proposals
• The proposals are fair and equitable in relation to any class of members or creditors that has not accepted them (and whose interests will be impaired by implementation)
• The proposals are not unfairly prejudicial to the interests of any interested party.
The proposals will not be confirmed if the primary purpose of them is the avoidance of payment of tax.
The Court will not confirm proposals if they would impair the interests of the creditors in a way that unfairly favours (new formulation) the creditors or members of a related company, to which the examiner has also been appointed.
There are four grounds which an objector to the proposals can move under:
• that there was some material irregularity at or in relation to the meeting of creditors and members (i.e. the Section 540 meeting),
• that acceptance of the proposals by the meeting was obtained by improper means,
• that the proposals were put forward for an improper purpose,
• that the proposals unfairly prejudice the interests of the objector.
This Section (Section 543) is a complete re-enactment of Section 25 of the C(A)A 1990.
This power to repudiate certain contracts, now found here (Section 537), used to be contained in Section 20 of the C(A)A 1990.
This power is subject to court approval. The company, on that basis, is allowed to repudiate certain uncompleted contracts which it has entered into.
Any person who suffers loss because of the repudiation becomes an unsecured creditor for the amount lost.
The law has protected lessors from having to accept reduced rents into the future, as a result of a company entering into examinership; it continues to do so.
Section 544 is a re-enactment of Section 25B of the C(A)A 1990.
The examiner may put forward a proposal that liabilities falling due under a lease – which fell due prior to the beginning of the examinership – be compromised. The examiner may seek creditor and court approval for such a proposal. But the quantum of rent payments due cannot be reduced unless the landlord consents in writing.
If the company fails to pay rent, or to pay any other periodic payment, or fails to observe a covenant, the landlord cannot be stopped from taking any of the following four courses of action:
• to recover possession of the land concerned,
• effect a forfeiture of the lease or otherwise enter on the land,
• to recover the amount of such rent or other payment,
• to claim damages or other relief in respect of the failure to comply with such a covenant or obligation.
Similar provisions apply in relation to leases and hire agreements for assets that are not land.