Ireland

Introduction

Pre-packs in Ireland probably are not as common as they should be. In theory, a pre-pack is broadly available in each of our insolvency procedures: liquidation, examinership and receivership.

The pre-pack approach has emerged as an innovative corporate rescue tool that incorporates the benefits of both informal and formal insolvency proceedings. The expression ‘pre-pack’ in an Irish context typically refers to the sale of a distressed business where the sale arrangements are negotiated, agreed and documented before the onset of a formal insolvency procedure and are effected on or shortly after the appointment of the insolvency practitioner.

A key facet of the pre-pack mechanism is that, in deciding whether to effect the sale, the insolvency practitioner does not have to involve the court nor consult with junior creditors who are often left with little or no value following the sale.

Pre-pack transactions have been a feature of the insolvency landscape of other jurisdictions such as England and Wales for some years, but until the past decade had been relatively uncommon in Irish insolvency practice.^[2]

While liquidation or examinership are processes that can broadly be used to implement a pre-pack sale in Ireland, normally pre-packs are implemented through receivership.

Overview of key restructuring tools

Pre-insolvency processes

‘Pre-insolvency’ is not a term of art and when used in this jurisdiction refers to events that occur before a company becomes insolvent.

In contrast, pre-insolvency as a concept tends to be more widely used and attracts a plethora of varying definitions across the European Union. This has occurred against the backdrop of what some would describe as ‘an almost feverish sense among most of the European states to outdo the others in amending their [insolvency] laws’.^[3]

In general terms, pre-insolvency is the financial situation in which a debtor is often able to meet its current obligations as they fall due, but where it is expected that this will no longer be the case at a point in the future and insolvency is inevitable. Those involved in a pre-insolvency process typically want to intervene to avoid asset value diminution or creating personal liability exposure for directors. In an Irish context, the closest we have found to a pre-insolvency process includes elements of refinancing, or contractual-debt resizing or restructuring.

The purpose of pre-insolvency procedures is typically to provide creditors with a better return outside the framework of formal insolvency proceedings. As in the United Kingdom, a scheme of arrangement is available in Ireland as an effective formal restructuring tool that is not an insolvency process. A successful scheme of arrangement should obviate the need for an insolvency process. A scheme of arrangement can be pre-agreed among a sufficient number of creditors (typically through a lock-up agreement) to ensure the statutory creditor approval threshold is met, but ultimately it is the decision of the court whether to sanction the scheme.

In the context of pre-insolvency proceedings, on 26 June 2019, the European Union adopted the Preventative Restructuring Framework Directive (the Directive).^[4] The Directive looks to introduce some minimum standards for preventive insolvency proceedings across the European Union to enable debtors in financial distress to address their debt problems at an early stage and avoid formal insolvency proceedings. The Directive, which appears to be influenced to a degree by Chapter 11 of the US Bankruptcy Code, allows Member States flexibility as to the most appropriate means to implement the key principles, such as the availability of early warning tools for insolvency. Member States are required to adopt and publish compliant domestic laws by 17 July 2021.

While Ireland has a strong corporate rescue culture (in the form of examinerships, schemes of arrangement and pre-pack receiverships) in light of the divergences between the current Irish processes and the Directive, an additional procedure may be required in order to implement the proposals under the Directive.^[5] The Law Society of Ireland has already indicated, prior to its introduction, that it supports the key objectives of the Directive.^[6]

Irish restructuring and insolvency processes

The four key Irish restructuring and insolvency processes are: liquidation, receivership, examinership and schemes of arrangement.

Liquidation

Liquidation is a terminal process that ultimately results in the final dissolution of a company, and is governed by Part 11 of the Companies Act 2014. Liquidation can take the form of either a court ordered liquidation or a (solvent or insolvent) voluntary liquidation.

The function of the liquidator is to take control of all the assets of the company and to realise them to satisfy, in whole or in part, the debts due to the company’s creditors. Any surplus will be remitted to the company’s shareholders. The liquidator has broad power to take all measures as deemed necessary for winding up the affairs of the company and distributing its assets.

A court-ordered liquidation occurs where the court is petitioned to have a company compulsorily wound up. A provisional liquidator may be appointed by the court in the interim period between the petition issuing and the subsequent making of the winding-up order. The effect of a winding-up order is to appoint the official liquidator and to place the company into liquidation.

Companies may also be wound up voluntarily, through a creditors’ voluntary (insolvent) liquidation and a members’ voluntary (solvent) liquidation respectively. The effect of the company entering into a creditors’ or members’ voluntary liquidation is similar to the court granting a winding-up order.

A creditors’ voluntary liquidation may occur where a company is insolvent. The company’s directors resolve in a meeting to wind up the company and to appoint a liquidator. A shareholders’ meeting and a creditors’ meeting are then called. The shareholders must agree to pass a resolution resolving to wind up the company and to appoint a liquidator. At the creditors’ meeting, the directors must inform the creditors of the winding up resolution passed by the shareholders. The company must nominate a liquidator, who may be approved by the creditors. Alternatively, the creditors may nominate their own liquidator.

A members’ voluntary liquidation is a solvent liquidation, and essentially entails the preparation and signing of a declaration of solvency by a majority of directors, and the passing of resolutions resolving to wind up the company and appoint a liquidator.

In addition to the Companies Act liquidation regime, the Irish legislature has seen fit, in particular circumstances, to develop bespoke resolution regimes on an ad hoc basis. Examples of this include the Insurance (No. 2) Act 1983, developed to address the insolvency of insurance undertakings and more recently, the creation of the ‘special liquidation’ regime for Irish Bank Resolution Corporation Limited (the successor to Anglo Irish Bank Corporation Limited and Irish Nationwide Building Society) in February 2013.

Receivership

Strictly speaking, receivership is not an insolvency process but rather an enforcement mechanism for a secured creditor. The process is primarily governed by the security documentation and Part 8 of the Companies Act 2014 (where the security provider is a corporate entity).

Receivership is a distinct enforcement remedy available to secured creditors only and does not involve the commencement of insolvency proceedings. The effect of the appointment of a receiver is to suspend the company’s powers in respect of the secured assets over which the receiver has been appointed.

Section 437 of the Companies Act grants extensive statutory powers to receivers, in addition to those conferred by the relevant security document. Once the receiver has realised the secured assets over which he or she has been appointed, and remitted the proceeds to the secured lender, the receiver will be discharged pursuant to the relevant security document.

Under Section 439 of the Companies Act 2014, a receiver of a company’s property shall, in selling that property, exercise all reasonable care to obtain the best price reasonably obtainable for the property as at the time of sale. This is an important point, as the qualifications contained in this section enable a receiver to act expeditiously in selling company property. However, in circumstances where there is unlikely to be a marketing process by a receiver in the context of a pre-pack, this statutory duty underscores the importance of obtaining an independent valuation that will stand up to scrutiny.

As noted under ‘Liquidation’, the Irish legislature has shown innovation over the years. In this regard, Ireland took extraordinary measures to control contagion within the domestic banking industry in 2008, in the wake of the global financial crisis. One of the measures taken included the establishment of the National Asset Management Agency (NAMA). NAMA is essentially a government-backed bank, developed to take receipt of, and manage, non-performing eligible assets belonging to Ireland’s participating financial institutions. In order to work out the assets within its custody, once valued at around €77 billion, NAMA has extensive, legislative powers, including the ability to appoint statutory receivers with powers conferred on them by the NAMA Act 2009.

Examinership

The Irish examinership regime was introduced in 1990 as a response to the imminent collapse of the beef exporting Goodman Group of companies. This followed the United Nations’ imposition of sanctions on Iraq, an economy that was important to the Irish beef industry at the time. From these beginnings, examinership has developed into Ireland’s premier vehicle for corporate rescue and is the European Union’s closest equivalent to Chapter 11.

Examinership is a process whereby a company in financial difficulties is placed under the protection of the court. Examinership is governed by Part 10 of the Companies Act 2014.

The aim of examinership is to provide for a structured arrangement with all creditors so as to preserve jobs and to allow companies with a potentially sound business model (but which has become burdened with an unsustainable level of debt) to continue to trade rather than be liquidated. The court will only appoint an examiner to a company where the judge determines the company has a reasonable prospect of survival as a going concern.

While a company is in examinership, there is a moratorium on action being taken by creditors against the company, for the duration of the examinership. This essentially prevents any creditor from attempting to wind up or appoint a receiver to the company in question. If the court approves the appointment of the examiner, the company will be under court protection for 70 days from the date of the presentation of the petition, which may be extended by the court by up to 30 additional days.

A petition to the court for the appointment of an examiner may be presented by the company, its directors, a creditor, a prospective creditor, or by the members holding not less than a tenth of the paid-up capital.

The function of the examiner is to conduct an examination of the company’s affairs, with a view to determining if the company is capable of surviving, and to formulate proposals for a restructuring of the company that would facilitate such survival. The examiner then reports to the court.

The examiner’s proposals are put to the various classes of creditors and shareholders for approval. Where approved, the proposals may then be considered by the court. If the court confirms the proposals, they are binding on all the company’s creditors and shareholders. The protection afforded to the company by the examinership process will cease on the approved compromise coming into effect. Where the court refuses to confirm the examiner’s proposals, it may make an order for the company to be placed into liquidation, if it considers it just and equitable to do so.

In 2012, the Irish telecommunications company, eircom, was successfully restructured through the examinership process. This was the largest successful restructuring through examinership to date, both in terms of debt quantum and company size.^[7] In all, €1.4 billion out of the total debt of €4 billion was written off the balance sheets of the eircom operating companies.

The eircom examinership, which resulted in the senior lenders becoming the new owners of the business, shows the speed with which a significant restructuring can be implemented where there is significant pre-process negotiation between the company and its lenders.

For the right candidate, pre-planning should limit the degree of damage to the business that might otherwise be incurred. In those cases, scheme proposals can be formulated by the company and its key creditors before the examinership commences. Thus, the examiner can come to the role with at least one potential restructuring proposal available offering some level of creditor support, a smoother path to implementation and a reduced risk of significant challenge at the confirmation hearing.

However, since the examiner is an independent court-appointed officer, he or she is obliged to consider all reasonable offers of prospective investment and restructuring proposals for the company. A proposal that has buy-in from a number of the company’s creditor groups almost inevitably becomes the ‘stalking horse’: the deal to beat.

In September 2019, Weatherford International plc issued a petition in Ireland that was accompanied by a fully formed proposal for a scheme of arrangement. The Irish High Court confirmed the examiner's appointment on 7 October 2019. If the scheme that was presented at the petition hearing is adopted by the examiner and sanctioned by the court, it will be the closest example we have seen in this jurisdiction to a pre-pack examinership.

Schemes of arrangement

A scheme of arrangement is a very flexible company law procedure whereby claims against a company can be compromised or arrangements can be made by the company with its members or creditors.

As long as a scheme is approved at a meeting of the creditors or, in separate meetings of different classes of creditors, by at least 75 per cent in value and a majority in number of those registered to vote on the scheme, and the court sanctions it, the scheme will be binding on all creditors, including those within each class voting against the scheme.

A key feature of a scheme is that it is not an insolvency process, which may make its use more appealing to directors and sponsors wishing to avoid any perceived insolvency-related stigma. Another key feature is that the Irish High Court has the discretion to stay all proceedings and restrain further proceedings against a company.

Schemes of arrangement have been less frequently used in Ireland than the United Kingdom because examinership tends to be a more effective restructuring tool for debtors insofar as it is a one-stop shop for change of ownership together with a mechanism to compromise creditor claims. In the United Kingdom, one would need to use administration plus a scheme of arrangement to implement the same steps.

Recently, in the case of Re Ballantyne Re plc,^[8] a scheme of arrangement to restructure US$1.6 billion of New York law-governed notes issued by Ballantyne Re plc, an Irish incorporated reinsurance vehicle, was approved by the Irish High Court.

The decision, which consolidates the law and creates helpful legal precedent in this jurisdiction on creditor schemes of arrangement, further establishes Ireland as a strong jurisdiction for complex financial restructurings.

In Ballantyne, the court relied on a number of key decisions of the courts of England and Wales relating to creditor schemes as authority to approve certain aspects of the Ballantyne scheme. In doing so, the Irish court has demonstrated a willingness to incorporate into this jurisdiction, the significant body of scheme jurisprudence from England and Wales, and indeed other commonwealth jurisdictions. The decision in Ballantyne smooths the way for further debt restructurings of this type in Ireland. In all, the High Court (Commercial) oversaw a process in Ireland that lasted just over five weeks.

Implementing restructurings on a pre-packaged basis

Which processes can be implemented in this way?

While the examinership process can involve a large degree of pre-process preparation, ultimately, one cannot entirely ‘pre-pack’ a transaction in an examinership. This is for two reasons. First, the scheme to put to creditors is ultimately one that the examiner must adopt, and he or she is an independent court-appointed officer who must consider all scheme-related issues on appointment. Second, the examiner’s scheme requires creditor approval (albeit at a relatively low threshold) and court sanction.

Liquidation can be used as a pre-pack tool, depending on the debtor candidate, the capital structure and the creditor profile.

Accordingly, while liquidation (and, to a certain extent, examinership) can be used to implement a pre-pack in Ireland, overwhelmingly, pre-pack sales are implemented through receiverships. For this reason, this chapter focuses on receivership pre-packs in an Irish context, the main factors to consider in a pre-pack deal, and the perception of pre-packs in Ireland.

Pre-pack receivership in an Irish context

Receiverships are a means of enforcing security whereby a secured creditor appoints a receiver over secured assets. A receiver is appointed as agent of the debtor or mortgagor rather than the holder of the secured debt.

There is no statutory or industry guidance or regulation available in Ireland as to the steps that a receiver should be engaged in to satisfy himself or herself with regard to the best price in circumstances where the assets are being sold through a pre-pack model (although, there is guidance in the United Kingdom, in the form of statement of insolvency practice (SIP) 16, which may be of assistance).

Factors to consider in a pre-pack deal

While unlike other jurisdictions, there is limited guidance in Ireland regarding best practice on pre-pack deal implementation, the following are some of the main factors one may have to consider in a pre-pack deal, depending on deal structure and factual matrix.

Due diligence

Accelerated due diligence should be conducted in advance. Although this process may be truncated when the sale is to a connected party, generally, it should include reviewing the validity of the security, the position of key creditors in an enforcement scenario and the impact of enforcement on contractual terms generally.

There is a risk that difficulties might arise for the new acquiring company in relation to liabilities that might not have been adequately addressed. Such liabilities, for example, regarding assets, guarantees or particular types of creditors, might only become apparent at a future date. It is important that the receiver who takes charge of the company’s assets, liabilities and business, addresses in detail, potential risks in this context. The importance of effective due diligence is, therefore, paramount.

Risk of litigation and junior creditor attack

Unlike in the United Kingdom, where pre-packs are more regulated (e.g., SIP 16), junior creditors have little leverage when it comes to challenging a pre-pack. This is often because the difference between the market value of the secured asset and the level of the secured debt makes a challenge on valuation (and, by extension, process) pointless. That said, junior creditors or preferential creditors (the tax authority, redundant staff claims, etc.) may establish a basis for challenges if, for instance, the receiver sale was to a connected party and the receiver did not give all creditors the statutory 14 days notification prior to sale.

While there have been a number of financially significant pre-pack receivership sales in recent times, a receiver may nonetheless request an indemnity from the secured lender to deal with any litigation or other risks that may arise as a result of the pre-pack sale.

Employee rights

A key part of preparing for a pre-pack transaction involves assessing employee liabilities. This will involve considering the application of the Transfer of Undertakings (TUPE) Regulations,^[9] and the pension and other rights of employees. In both a general and pre-pack receivership context, TUPE Regulations typically apply. Where the TUPE Regulations apply, employment rights and obligations of those staff connected with the business or assets being sold will transfer to the new owner. This includes all pre-existing liabilities, including breaches of the TUPE Regulations by the transferor. The TUPE Regulations trigger information and consultation obligations for both the transferor and the transferee, potentially requiring the new owner to take on the terms of a collective agreement negotiated with a trade union, while restructurings that involve dismissals by either the transferor or the transferee are prohibited except in limited circumstances.

Contracts

Typically, except where there are specific contractual provisions to the contrary, the appointment of a receiver should not have a significant impact on contracts to which the company is a party. However, there are exceptions, and the company’s material and business-critical contracts must, therefore, be reviewed to determine the operation of their termination provisions, and how ongoing obligations are to be managed. It is possible that valuable contracts may need to be novated or, indeed, that the transaction may have to be structured such that particularly onerous contracts can be left behind in the shell company.

Examinership risk

A trading company over which a receiver is appointed has three days to present a petition to the High Court seeking the appointment of an examiner. If this application succeeds, the receiver must stand aside, at least until the examinership concludes.^[10] This is a genuine risk to a pre-pack receivership when a sponsor or a board of directors is not aware of or supportive of the proposed pre-pack.

Valuation

The receiver is afforded considerable discretion in determining the timing of a sale of assets. He or she is not, for example, obliged to postpone a sale in the hope that the market improves. Nevertheless, the receiver has a statutory duty to get the best price reasonably obtainable at the time of sale. Worth noting in this regard that if the value of the secured assets breaks in the senior debt, it will be very difficult for junior creditors to challenge a transaction irrespective of sale price.

Since the business will typically not be exposed to market testing before the sale, it is difficult for a receiver to be sure that the price to be paid is the true market value. To enable a receiver to satisfy his or her duties in this regard, he or she should obtain at least one independent, professional valuation of the business or assets. The receiver will often seek a letter from the valuer confirming that the buyer’s offer represents the best price reasonably obtainable at that time. This will also be important if any party tries to challenge the sale by the receiver.

Consent

Consideration will have to be given to whether any regulatory notifications need to be made and the time frame that may elapse between notifications being made and approvals or consents being provided. For example, an acquirer of substance, operating within the target’s sector, may be required to make a notification to the Irish Competition Authority (now, the Competition and Consumer Protection Commission). Where this is the case, obtaining competition clearance will typically be made a condition precedent to completing the transaction. Equally, a pre-pack transaction that involves the acquisition of a food processing business may need to consider whether a notification must be made to the Food Safety Authority of Ireland.

Sale to a connected party

Irish company law^[11] prevents a receiver from selling an asset of the company to an officer of the company unless the receiver has given at least 14 days’ notice of his or her intention to do so to all known creditors of the company. For the purpose of the relevant provision, ‘officer’ includes a director or shadow director as well as a ‘connected person’. The definition of a person connected with a director of a company is extensive and extends to natural persons and legal persons. A body corporate will be deemed to be connected with a director of a company if it is controlled by that director.

How are pre-packs perceived?

In the United Kingdom, it was the growing public discontent, in respect of the perceived unfairness of pre-pack administrations, that led to the 2014 Graham Review. Following that review, voluntary industry measures were introduced that sought, in particular, to regulate pre-pack sales involving connected parties. Under the Small Business, Enterprise and Employment Act 2015, the UK government has the power (not yet invoked) to make regulations to impose conditions on property sales to connected parties in administration; however, this legislative power expires in May 2020.^[12]

By contrast, in an Irish context, there has been limited public commentary about the impact of pre-packs on unsecured creditors and the lack of transparency around the process. There has been no statutory or industry guidance issued on the subject and, in fact, there has also been little judicial guidance.

One notable Irish decision in relation to pre-packs is that of Ms Justice Finlay Geoghegan in Webprint Concepts Ltd v. Thomas Crosbie Printers Ltd and others (2013).^[13] In that case, in the context of Thomas Crosbie Holdings’ pre-pack deal (see below), Webprint claimed that a point of law of public importance should be determined by the court, i.e., that the receivership process, being used in a pre-packaged manner, gave rise to an abuse of process and deprived creditors impacted by the restructuring of the their procedural rights and protections.

On this point, Judge Finlay Geoghegan, when considering Webprint’s submissions, made the following general observation in relation to the Irish pre-pack process:

In my judgment, Webprint has not identified a point of law in this case of such gravity and importance as to transcend the interests of the parties actually before the Court which could be considered in the interests of the common good to require clarification.

Whilst pre-pack receiverships may be relatively novel, the term is not a definition of any one type of transaction. It covers many different potential factual situations.

In any so called pre-pack receivership the obligations on the participants will depend upon the facts and nature of the transactions. The determination of what were or were not the obligations of the Receiver herein will fall to be determined by applying well-established principles or provisions in the Companies Act (about the construction of which no uncertainty was identified) to the particular facts of this case.

There may well be points of importance which, if determined in this case, might affect subsequent transactions.

However, that is the position in many cases which come before the courts and in my judgment, falls short of the necessary characteristics to constitute a question of law of public importance.

Case studies

Our selected case studies represent examples of some of the high-profile pre-pack restructurings to have taken place in the Irish market. These examples highlight the intricacies and complexities of pre-pack receiverships and demonstrate the adaptability of the process to high-value, large-scale transactions involving key commercial stakeholders.

Superquinn

Superquinn was an Irish supermarket chain founded in 1960 by Fergal Quinn that operated over 20 high-end supermarkets across the country and was one of the most recognisable brands in Irish households.

Quinn sold the supermarket chain to a consortium of Irish property developers in January 2005 for €450 million. A combination of falling sales and declining market share subsequently proved fatal to Superquinn. By 2011, Superquinn had amassed debts of more than €400 million, of which €275 million was property related.

On 18 July 2011, Kieran Wallace and Eamonn Richardson of KPMG were appointed joint receivers to Superquinn and its parent company Tokad Company. The Superquinn grocery chain was sold to the Musgrave Group, an Irish public company active in grocery and food wholesale distribution, for approximately €230 million, by the joint receivers, in what has probably been to date the largest (publicly disclosed) pre-pack transaction in the Irish market.^[14]

The transaction, which involved the acquisition by Musgraves, through wholly owned subsidiaries, of 24 Superquinn stores and certain associated properties, had the following key elements:^[15]

• the transfer of the Superquinn supermarket retail business to a newly formed company, Remrock Limited (including all of the nearly 2,800 employees);
• Remrock did not acquire any of the liabilities of Superquinn;
• the acquisition by Screenridge Limited, a wholly owned subsidiary of Musgrave, of sole control of Remrock Limited;
• the acquisition by Ideaford Limited, a wholly owned subsidiary of Musgrave, of sole control of certain properties, from which Superquinn traded;
• Screenridge Limited was subsequently renamed ‘Superquinn;’ and
• all former Superquinn stores were subsequently rebranded under SuperValu (another Supermarket chain owned by Musgrave) in February 2014.^[16]

A notable aspect of this transaction was the involvement of the Competition Authority of Ireland owing to the proposed merger of two large domestic supermarket businesses (Superquinn and SuperValu). The Competition Authority had questions about certain arrangements that had been put in place between the parties under which Musgrave was to provide consultancy services to the joint receivers. The Authority’s initial view was that these arrangements might amount to prior implementation of the merger, in breach of Section 19(1) of the Competition Act 2002.^[17] However, it ultimately became clear, to the satisfaction of the Authority, that the objective of those arrangements was to maintain the value of the target business pending a determination by the Authority.

Thomas Crosbie Holdings

Thomas Crosbie Holdings (TCH) owned several Irish newspapers, including The Irish Examiner and The Sunday Business Post, as well as a number of regional print titles and broadcast investments. The Crosbie family itself had a long-standing association with the newspaper business in Ireland stretching back to 1842.

TCH became increasingly acquisitive in the early 2000s, buying many regional titles and some national titles, including The Sunday Business Post. As a result of the economic crash, declining readership numbers and the onset of alternative media, TCH was suffering financially. By 2011, it found itself with bank debt of €27 million^[18] and constrained under the terms of an onerous printing contract between Thomas Crosbie Printers Limited (TCP), a TCH group company, and Webprint Concepts Limited (Webprint).

The secured lender, Allied Irish Banks plc (AIB) appointed Kieran Wallace of KPMG as receiver, on the morning of 6 March 2013.^[19] Within hours of the appointment of the receiver, most of the assets of TCH were bought from the receiver by a newly formed company, Landmark Media Investments (Landmark), a company owned by Tom Crosbie and his father, Ted Crosbie (who had both been shareholders in TCH). The transaction, which also involved the transfer of all 554 people employed in TCH operations to Landmark, took the following form:^[20]

• AIB made demands for repayment on several companies within the TCH Group. It made no demand on TCP, although AIB held a guarantee and debenture from TCP.
• AIB appointed a receiver to the companies within the TCH Group upon which it had demanded. The receiver was not appointed to TCP.
• AIB, as mortgagee, sold to a newly incorporated subsidiary of TCH, Sappho Ltd (Sappho), assets of some companies within the group and shares in other subsidiary companies. The assets and shares were sold for amounts specified in accordance with a valuation that had been carried out, aggregating approximately €18.5 million.
• TCP sold to Sappho its 85 per cent interest in 97 South Mall, Cork for €1.02 million.
• AIB provided facilities to Sappho to purchase the assets and shares from AIB and the 85 per cent interest in the property at South Mall from TCP.
• TCH (acting through the receiver) sold the entire issued share capital of Sappho to Landmark for a consideration of €1. AIB provided finance to Landmark to refinance the earlier facilities granted to Sappho and to provide additional funding for working capital.
• The directors of TCP resolved to cease trading with immediate effect and recommended to its shareholders that it should petition for the winding up of the company. A written resolution of TCP’s shareholders was passed to petition the High Court to wind up TCP.
• As part of the restructuring of The Sunday Business Post, its publisher Post Publications Limited, applied to the High Court for the appointment of an examiner, which had not guaranteed any of the liabilities of TCH and was not subject to a charge by AIB.
• TCP then applied to the High Court for the appointment of a liquidator. The liquidation of TCP resulted in the loss of 12 jobs.^[21]

Central to the TCH pre-pack plan was the ability of the company to exit an onerous printing contract with Webprint (see above). The Irish Times then contracted with Landmark to provide printing services, commencing on the night of 6 March 2013, the same day as the appointment of the receiver.

Conclusion

In Ireland, examinership is viewed as more business-friendly to receivership in terms of preserving a trading undertaking. However, receivership (and in particular pre-packs) can be hugely effective in preserving enterprise too. If implemented speedily through a pre-pack, receivership can prove to be a very effective way to maintain the viability of a business in terms of employment, customer base and relationships with key suppliers.

Despite some criticism levelled at the pre-pack concept, there will be circumstances where the reasons for using a pre-pack are commercially compelling. Also, so long as the insolvency practitioner can stand over the price for the sale of assets, then unsecured creditor opposition (without legislative intervention) is unlikely to come to much. In circumstances where the business in question is suffering from falling asset values and has a level of distress, creditors challenging a pre-pack process, that preserves enterprise, will likely face an uphill battle.

Notes