INSIGHTS | INSOLVENCY & CORPORATE RESTRUCTURING | BY SEAMUS ENNIS

On 7 May 2025, Mr Justice Michael Quinn delivered Judgment for the High Court wherein the question of the High Court’s jurisdiction to recognise foreign insolvency proceedings was considered.

Background

Mercer Agencies Limited (in Administration) (the “Company”) is a company incorporated under the laws of the United Kingdom and had its registered office in County Down, Northern Ireland.  The Company engaged in the wholesale supply of decorations, garden furniture and garden trellises with its principal place of business being Northern Ireland.  A large portion of the Company’s debtors were incorporated / lived in the Republic of Ireland and the largest single debt was owed to the Company by Rath-Wood Home and Garden World Limited (“Rath-Wood”), which had its registered office in Carlow.  Arising from a deterioration of trade and ensuing financial difficulties, the Company entered administration on 28 November 2024 when Scott P. Murray and Ian Davison, of Keenan Corporate Finance Limited, Belfast, acting as joint administrators (the “Joint Administrators”) were appointed pursuant to the Insolvency (Northern Ireland) Order 1989 (“the 1989 Order”). At the time of administration Rath-Wood owed the Company $1,499,399.17.

Following their appointment, efforts were made by the Joint Administrators to secure a degree of co-operation with Rath-Wood to commit to a repayment plan. As recovery of the debt and securing stock owned by the Company would be critical to the objective of achieving the best possible result for creditors of the Company, the Joint Administrators felt it may become necessary to bring proceedings for recovery of the debt.

In order to commence legal proceedings in the State, the Joint Administrators required their appointment, and resultant powers, to be recognised by the Courts of the State. Hence, an ex parte application was brought before Quinn J of the High Court for an order recognising the following:

  • the entry of the Company into a process of administration pursuant to the 1989 Order
  • the appointment of joint administrators Scott P. Murray and Ian Davison, of Keenan Corporate Finance Limited, Belfast as joint administrators (“the Joint Administrators”)
  • the powers of the Joint Administrators to bring or defend any action or legal proceedings in the name of and on behalf of the Company pursuant to s. 627, Table 1, Paragraphs (a) and (b) of the Companies Act 2014, in a manner analogous to Article 6 of Schedule 1 of the 1989 Order, 2, and
  • the power of the Joint Administrators to collect and gather in the property of the Company and for that purpose to maintain such proceedings as may seem to them expedient in accordance with s. 624(2) of the Companies Act 2014, which power corresponds to the power contained in Article 1 of Schedule 1 of the 1989 Order

Pre Brexit Position

If administration of the Company occurred prior to Brexit, an application of this nature would not have been required. Council Regulation 1346/2000, which entered into force on 31 March 2002, and the recast regulation of 20 May 2015, EU 2015/848 (the “Regulations”), provide for recognition throughout the European Union (with the exception of Denmark) of insolvency proceedings opened in member states, and any orders made in the course of those proceedings. Accordingly, the appointment of the administrators under the 1989 Order and their powers would have been recognised by the State without further formalities, subject to satisfaction of certain basic conditions under the Regulations.

For 18 years the Regulations governed recognition of insolvency proceedings as between the United Kingdom and the State. However, following the United Kingdom’s exit from the European Union on 31 January 2020, the Regulations no longer govern recognition in this State of insolvency proceedings instituted in the United Kingdom, including administrators appointed under the 1989 Order, and the Court was required to consider this application without reference to any direct precedent.  The Court was however aided by a number of cases concerning non-European Union states.

Post Brexit Requirements for Recognition

The Court had particular regard for the Judgment of Ms Justice Laffoy in Re Mount Capital Fund Limited (In Liquidation) and Another [2012] IEHC 97, where Joint Liquidators appointed by the High Court of Justice of the British Virgin Islands sought the aid of the Irish High Court for the purpose of recovering the books & records and assets of the company that lay within the jurisdiction of the Irish High Court.

In the first instance, Laffoy J found that the Court does have inherent jurisdiction to recognise insolvency proceedings outside the European Union.

Laffoy J’s judgment is informative for insolvency practitioners and solicitors as same clearly outlines the issues to be taken into consideration by the Court when an insolvency practitioner is seeking to have non European Union insolvency proceedings recognised by the State:

1. Equivalence

In Re Mount Capital Fund, the liquidators adduced evidence as to the equivalence of approach to the winding up of companies under the Insolvency Act 2003 of the British Virgin Islands (“the BVI Act”) with the approach adopted in this jurisdiction under the Companies Act 1963 and amending legislation. Laffoy J. was satisfied that the liquidators had shown a prima facie case for the conclusion of equivalence between s. 245 of the Act of 1963, which the liquidators proposed to invoke if given recognition, and the corresponding provision, s. 284, of the BVI Act.

2. Legitimate Purpose

In addition to equivalence, Laffoy J found that a Court should have due consideration for the underlying purpose of the application to recognise proceedings:

“I consider that the Court does have an inherent jurisdiction to give recognition to insolvency proceedings in jurisdictions outside the European Union. However, I consider that, in the exercise of that jurisdiction, the Court should be satisfied that recognition is being sought for a legitimate purpose. I believe that a legitimate purpose has been demonstrated in this case, in that the objective of the liquidators is to seek to obtain relief of the nature provided for in s. 245 of the Act of 1963.”

With Laffoy J’s principle considerations of equivalence and legitimate purpose firmly in the mind of Quinn J, he proceeded to examine the relevant provisions of the 1989 Order alongside those concerning examinership under Part 10 and winding up under Part 11 of the 2014 Act. In doing so, Quinn J observed that although differences between the respective provisions exists, this does not imply a lack of equivalent jurisdiction in matters of corporate insolvency overall, nor does it suggest that recognition is being sought for anything other than a legitimate purpose in carrying out the statutory duties of the insolvency office holder:

“The purpose of this application is to ensure that insofar as it may be necessary for the Joint Administrators, in the performance of their statutory duties of realising assets for the benefit of creditors, to take any action, whether by way of legal proceedings or otherwise, in the State they may do so without encountering delay associated with establishing their standing to do so on behalf of and in the name of the Company in administration. This is clearly a legitimate purpose, again having direct equivalence with the functions of a liquidator appointed under Part 11 of the Act of 2014.”

Accordingly, Quinn J was satisfied to make the Orders referred to above.

Conclusion

As can be seen, recognition applications for non European Union insolvency proceedings are not a new phenomenon,  however, the removal by Brexit of what was effectively automatic recognition (subject to the satisfaction of a few basic conditions) for insolvency proceedings instituted in the United Kingdom of Great Britain and Northern Ireland will inevitably give rise to an increase in the number of applications for recognition being brought before Irish Courts by UK companies. In a similar fashion, insolvency proceedings commenced in this State will require the recognition of UK Courts where insolvency practitioners intend on exercising their powers in the UK.  That Quinn J had no precedent to refer to in Re Mercer Agencies Limited is indicative of both the benefit of the Regulations for member states and, also, the increased considerations for insolvency practitioners in Ireland and the United Kingdom who intend on having their proceedings recognised in each other’s jurisdictions.

How We Can Help

BHSM’s Insolvency & Corporate Restructuring department is particularly noted for its contentious expertise and court experience, including court liquidations, appointments of provisional liquidators, examinerships and receivership.  Should you have any queries or would like to discuss the above in further detail, please feel free to contact Sarah O’Toole ([email protected]) or Seamus Ennis ([email protected]).

This article is for general information purposes. Legal advice must be obtained for individual circumstances. Whilst every effort has been made to ensure the accuracy of this article, no liability is accepted by the author for any inaccuracies.

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