Regulation of Receivers & Enforcement of their Duties

Part 8 – Receivers

These provisions (Section 442) re-enact Section 322 of the 1963 Act.

The provisions deal with situations where a receiver has failed to deliver returns, accounts, and other documents. The Court may direct the receiver to do what he is obliged to do, and give a time limit. Members, creditors, the liquidator of the company or the Registrar may make such an application.

The receiver may well be fixed with the costs of such an application.

This section (Section 443) is a re-enactment of the law on fraudulent dispositions, which was set out in Section 139 of the CA 1990 (that section also applied to receivers with the appropriate modifications).

The key thing about this provision is that the receiver has to establish that the effect of a disposition of assets was to perpetrate a fraud on the company. This was something of an innovation in 1990 but has since become well known as the provision that goes hand in hand with fraudulent preferences applications (Sections 443(3) and 604).

The Court has the power to fix the remuneration of the receiver. This can be amended by the court on the application of the receiver, or the liquidator, or any member or creditor of the company (Section 444).

As before, this court power does not interfere with the receiver’s right to be indemnified by the company.

In practice, the Court will only interfere in the issue of the receiver’s remuneration where the remuneration is excessive.

This provision (Section 445) re-enacts Section 322B of 1963.

Where a liquidator has been appointed, she may apply to Court to limit or end the receiver’s role in relation to the company. The section is there to deal with the problems that could arise from the uneasy cohabitation of receiver and liquidator.

The other practical element is this: instead of two sets of costs for an insolvent company there will be one.

If a liquidator is making this application, she must serve notice on the receiver – and on the party which appointed him – at least seven days before the hearing.

This section (Section 446) re-enacts Section 53 of the CLEA 2001.

It empowers the Director of Corporate Enforcement (“DCE”)  to request a receiver to produce – where the DCE “considers it necessary or appropriate” – the receiver’s books for examination. The books may relate to one particular receivership or to all receiverships which that person has carried out.

The powers of the DCE and the obligations of the receiver are broad, and can be distilled into a single rule of thumb: the receiver must give all assistance as he is able to give.

This is a new section (Section 447), though it draws on various older provisions.

If the receiver comes to believe that an officer of the company – past or present – has been guilty of an offence in relation to the company, the receiver must “forthwith” report this to the Director of Public Prosecution (“DPP”). The second duty is to report it to the DCE. In both cases, the receiver must provide all relevant and necessary information.

If either the DPP or the DCE decide there is a case to answer, every officer of the company (past and present) has “a duty” to give assistance in connection with the prosecution. (The only person exempted from this duty is the person being prosecuted).

That duty to give assistance extends to the bankers and solicitors of the company as well as any financial advisers (auditors, accountants, book-keepers, tax advisors, etc, etc).

This section (Section 448) re-enacts Section 58 of the Companies Law Enforcement Act 2001.

Liquidators and professionals do not need to have any professional qualifications or to be members of a professional body. But if they do, and if they are, and if that body finds that the person in question has not kept appropriate records, or has grounds for believing that the person in question committed a Category 1 or 2 Offence during the receivership, then that body must report the matter to the DCE.

If the professional body fails in this duty, it is guilty of a Category 3 Offence (i.e. liable to a €5,000 fine).