HomeCommercial Litigation & Dispute ResolutionLavelle Solicitors set legal precedent in EU Law

Lavelle Solicitors set legal precedent in EU Law

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Lavelle Solicitors was successful in advising their client, Rathville Company Limited (the “Petitioner”), in appointing a Liquidator to McArthur Group Limited (“the Company”) on 8 July 2014.  The Company, a prominent player in the steel industry is incorporated in the UK.  The Company has a registered Branch in Ireland which traded from premises at M50 Business Park, Dublin 12.

An initial application presented by Lavelle Solicitors to appoint a Provisional Liquidator was unique in that Joint Administrators had been appointed to the Company on 8 May 2014 in the UK.  The Petitioner was apprehensive as to what might happen in the UK insolvency proceedings and as such sought to have the Company wound up in this jurisdiction.  The Company owned stock and a property valued in the region of €3m within this jurisdiction.  Mr. Myles Kirby of Ferris & Associates was appointed as Provisional Liquidator in Secondary Proceedings under EC Council Regulation No. 1346/2000 “the Insolvency Regulation” on 30 May 2014 by order of Gilligan J.

The hearing to appoint an Official Liquidator to the Company began before Charleton J. in the High Court on 7 July 2014.  The Petitioner’s application was strongly opposed by the Joint Administrators; Price Waterhouse Cooper (“PWC”) who averred amongst other arguments that the Company did not have an “Establishment” in this jurisdiction within the meaning of the Insolvency Regulation at the time the Petition to wind up the Company was presented.  It was argued that the Irish Branch shut down on 24 February 2014 and as such Secondary Insolvency Proceedings could not be opened as the Petitioner could not satisfy the requirement under the Insolvency Regulation of an Establishment existing within this jurisdiction.

Following the successful appointment of the Provisional Liquidator upon the application presented by Lavelle Solicitors, substantial debts owing to the Revenue Commissioners and South Dublin County Council had been uncovered and the Court was of the view that it was a very useful exercise.

Following lengthy legal submissions, the Court saw fit to appoint Mr Kirby as Official Liquidator and made reference to the following: –

“The Trustees of the Olympic Airlines SA Pension & Life Insurance Scheme and Olympic Airline , Interedil Srl, in liquidation v Fallimento Interedil Srl and Intesa Gestione Crediti SpA  Malcolm Brian Shierson v. Clive Vieland-Boddy , the Insolvency Regulation generally and more specifically Recitals 10 – 13, 16, 18 – 20, in addition to the Vigós-Schmit Report on the Convention .

The Court noted that the Company had been present in Ireland for at least ten years and applied the following rationale:  Foreign economic operators conducting their economic activities through a local establishment should be subject to the same rules as national economic operators as long as they are both operating in the same market.  In this way, potential creditors concluding a contract with a local establishment will not have to worry about whether the company is a national or foreign one. Their information costs and legal risks in the event of insolvency of the debtor will be the same whether they conclude a contract with a national undertaking or a foreign undertaking with a local presence on that market.

The Court held that an Establishment as per the Insolvency Regulation existed within this jurisdiction and that there was a strong case for the appointment of an Official Liquidator.  The Court noted that Mr. Kirby had carried out very significant work since his appointment as Provisional Liquidator and highlighted that the Revenue Commissioners and South Dublin County Council would enjoy a more secure preferential status within this jurisdiction than that which they might otherwise enjoy in the UK administration proceedings.  The Court suggested that the proof of the pudding was in the eating because once Lavelle Solicitors successfully had the Provisional Liquidator appointed; factors which the main administrator in the UK could not have been aware of were immediately brought to light.

The Court exercised its discretion in appointing the Official Liquidator thereby resulting in a very favourable result for the Petitioner and setting a very significant precedent in EU Law.

  1WLR 1401
  [2011] ECR I-09915
  [2005] EWCA Civ 974
  6500/96/EN, Brussels, 3 May 1996