Category: Galligan Johnston News

Galligan Johnston instructed in Sodium Valproate Claims


Galligan Johnston solicitors have recently received instructions in a number of claims being brought by parents of children born with FACS (Foetal Anti-Convulsant Syndrome), an umbrella term used to describe a range of physical and learning disabilities known to be caused by certain anti-convulsant medication when taken to treat the symptoms of epilepsy either prior to or during pregnancy.  Sodium Valproate, marketed by Sanofi as Epilim in Ireland, the UK and further afield, is one such drug which has been linked with significant risks of both physical and mental issues including spina bifida, autism and others.  Sodium Vaproate was licensed in Ireland in the early 1980s but has been prescribed since the mid to late 1970s if not earlier, and continues to be distributed in Ireland, oftentimes without adequate or indeed any patient information regarding potential side effects.

Galligan Johnston are supporting OACS (the Organisation for Anti-Convulsant Syndrome) as it works to dramatically improve patient awareness of the risk of significant and life-limiting side effects for their children.  We look forward to advancing these matters and to achieving long overdue justice for those affected.

If you suspect that you or your child may suffer from FACS please contact your medical professional immediately.  You can also contact OACS at  If you wish to discuss the matter further with us in confidence, please contact Sam Saarsteiner, partner, at 01-6344680, or


Professional Negligence Litigation

Galligan Johnston Solicitors specialise in seeking recovery for clients who have suffered losses as a result of the negligence of their appointed professionals.  We have built up a particular track record against solicitors’ firms in cases of manifest negligence.  These cases have resulted in significant recovery for clients.

There are many pitfalls to taking such actions.  The court cases are often very intricate and can involve complex conveyancing and tax issues.  It is for this reason that we work with our panel of expert witnesses who have vast experience in assessing whether or not a professional has fallen so short of the relevant guidelines for practice as to be negligent.

Professional Indemnity Insurance is a cost paid by all solicitors, accountants and tax advisors to provide for such claims and therefore in the vast majority of claims, a successful claim will lead to actual recovery.

The Statute of Limitations places a time limit on when such claims can be brought and swift action may be required depending on the circumstances.  Time is often of the essence by the time a client presents to us with a potential claim.  Early and thorough preparation and investigation is the key to increasing chances of success.

If you have suffered a loss as a result of what you suspect is your professional’s negligence, please contact Sam Saarsteiner, head of our Litigation Department, on 01-6344680 or


Has your lender breached your loan agreement?

Recent cases have come to light where Lending Institutions have sought to unilaterally change the method of calculation of the interest rate and therefore unilaterally alter the rate of interest to be charged on the customer’s loan, contrary to the terms of the Loan Agreement and at a significant expense to the customer.

In doing so, the Lending Institutions seek to rely on a provision that is usually contained in their Standard Terms and Conditions which allow them to vary the interest rate and/or method of calculation at its discretion. This may, for example, be used when a Lending Institution is seeking to compensate for losses elsewhere in its business.

This is especially relevant in cases where the Loan Agreement states a specific method of calculation and rate of interest which the customer replies upon and which may have induced the customer to accept the Loan Offer in the first place.

The terms of the Loan Agreement generally cannot be changed unilaterally by the Lending Institution or the customer. Any attempt by the Lending Institution to do so may be illegal if not provided for in the terms of the agreement itself.

In certain limited circumstances it may be that the Loan Agreement specifies an agreed interest rate and/or basis of calculation, which provision supersedes the Lending Institution’s Standard Terms and Conditions. There are legal remedies available to customers affected by such action by Lending Institutions. This includes issuing proceedings for damages for breach of contract, negligence, breach of duty and/or misrepresentation.

If you believe that your lending institution has breached the terms of your loan facility, please contact either Sam Saarsteiner or Karen O’Brien in our Litigation Department on (01) 6344680 or by email ( or to speak with us in confidence.



Redundancy Guidelines For Employers

It should be pointed out that the below recommendations relate only to procedural matters in embarking on a redundancy plan. Irrespective of any steps adopted or advices followed it is the case that any employees that are made redundant and subsequently pursue a claim against the Employer alleging unfair selection for redundancy and accordingly a claim for unfair dismissal. If an employee who has been dismissed brings a claim before the Employment Appeals Tribunal alleging Unfair Dismissal, there is a presumption that the dismissal is unfair, and the onus rests on the Employer to discharge that presumption. The purpose of taking professional legal advice and adopting a fair consultation and selection process is to make it more difficult for a potential claimant to succeed on the grounds of failure to adhere to proper procedures.

1. What is a “Redundancy”?

Before setting out the recommended procedures to be adopted in a redundancy situation it is necessary to set out what, in fact, constitutes a “redundancy.” The relevant definition arises from the Redundancy Payments Act, 1967, Section 7(2) as amended by Section 4 of the Redundancy Payments Act, 1971, and Section 5 of the Redundancy Payments Act, 2003. An employee who is dismissed shall be taken to be dismissed by reason of redundancy if, for one or more reasons not related to the employee concerned, the dismissal is attributable wholly or mainly to a number of situations outlined in Section 7(2), as amended.

If an employee’s employment is terminated by reason of a valid redundancy situation, and the employee is fairly selected for redundancy, then the termination will not constitute an unfair dismissal. It is important to note that both criteria must be met, ie:

• a valid redundancy situation must arise; and
• a fair and transparent selection procedure is adopted.

2. Redundancy Criteria

In order for a valid redundancy situation to apply the following criteria must apply:

• There is a requirement that there is a change in the workplace. That can be anything from a shutting down of a business to a reorganisation. Similarly it can involve a change in the way the work is done, or in the nature of the job.
• There is a requirement of impersonality i.e. in order for a valid redundancy to exist it must be unconnected to the particular employee who is to be made redundant.
• The termination must arise “wholly or mainly” by reason of redundancy. Hence evidence of disagreements with management may give rise to a claim that a termination lacks the impersonality to amount to a valid redundancy and/or that the termination did not arise wholly or mainly by reason of redundancy, but rather for other, unconnected reasons.

If, having satisfied itself that there is a legitimate need to effect redundancies, the Employer must then consider the most appropriate method to apply to the selection of employees.

3. Collective Redundancies

If the Employer is proposing to affect Collective Redundancies then it is necessary to consider the provisions of the Protection of Employment Act 1977. A collective redundancy is one in which, in any period of 30 consecutive days, the number of dismissals reaches or exceeds:

• 5 in a business employing more than 20 and less than 50;
• 10 in a business employing at least 50 but less than 100;
• 10% of employees in a business employing at least 100 and less than 300; and
• At least 30 in a business employing 300 or more

4. Consultation Process

(1) A letter to the employees should invite a representative of the employees to be appointed. That person will engage with management of the Employer in regard to alternative solutions and if necessary, redundancies.

(2) Once a representative is appointed that person should be consulted with regard to possible alternative solutions and further in regard to the selection criteria, if redundancy becomes an unavoidable solution.

(3) Consultations are to take place as soon as possible. The consultations must occur no later than 30 days before the first dismissal is affected.

(4) After the consultation the Employer is obliged, by the virtue of the Protection of Employment Act, 1977 to supply the employees’ representative with all relevant information in writing seting out the following information:

(a) The reasons for the proposed redundancies;
(b) The number and description of the categories of employees whom it is proposed to make redundant;
(c) The number of employees, and description of categories, normally employed;
(d) The period during which it is proposed to effect the proposed redundancies;
(e) The criteria proposed for the selection of the workers to be made redundant; and
(f) The method of calculating any redundancy payments other than those methods set out in the Redundancy Payments Acts 1967 to 2007.

(5) The persons whom it is intended will be made redundant should be invited to attend individual meetings with selected management personnel of the Employer and each employee should be invited to make submissions in relation to possible alternative solutions to redundancy.

(6) If a “collective redundancy” is being considered then the Employer has an obligation to notify the Minister for Jobs, Enterprise and Innovation of the proposed redundancies at the earliest opportunity and again, in any event, at least 30 days before the first dismissal takes effect.

(7) Having addressed all of the above matters it is then in order to serve formal notification of redundancy which involves furnishing the RP50 Form to each employee selected. Each employee who has 104 weeks continuous service is entitled to statutory redundancy equating to 2 weeks per year of service, and an additional bonus week. The Employer can process a rebate of 60% of that payment by furnishing a copy of the RP50 to the Social Insurance Fund thereafter.

For further information on the law applying to redundancy matters please contact Edward Johnston of this office at


Personal Guarantees

As the Irish economy continues to endure troubled times, more and more people are unfortunately becoming painfully aware of the consequences of guaranteeing the debts of their business or of a business associate.
Guarantees can be limited in amount and/or duration. Potential guarantors should always be absolutely clear in the understanding of these particular points before signing a guarantee, and should also know precisely whose obligations are being guaranteed.
Banks often seek personal guarantees as an added form of security when extending credit facilities, be it through overdraft or term loans. Landlords will often require similar personal guarantees in lieu of a rental deposit. The advantage in personal guarantees as security for a company’s debts is that they entirely bypass the separate legal personality of a company and allow the creditor to recover from a third party (often the directors or shareholders) who are often a better mark in a situation where a company is facing insolvency. In addition it allows a lender to tap into the creditworthiness and assets of a party who is not a signatory to the underlying contract (be it a credit facility agreement, charge or a lease).
The Courts have evolved a significant body of case law which provides numerous rights to guarantors. These include:
1. A right of indemnity from the borrower in the event that the guarantor pays all or part of the debt;
2. A right of subrogation in the event that the guarantor discharges the entire debt, so that the guarantor effectively steps into the shoes of the lender;
3. A right to be released from the guarantee in the event that other co-guarantors are released or have the terms of their specific guarantees varied by the lender.
As banks in particular have become experienced in the range of defences which have historically been available to guarantors when a guarantee is called upon, the standard forms of personal guarantee issued by banks have developed to protect the bank’s interests. Personal guarantees will now often expressly exclude rights which were historically afforded to guarantors by the Courts. As guarantees are almost always issued by the party seeking to rely on them, any vague wording will, as a matter of legal principle, be construed by a Court in favour of the guarantor.
Therefore, if a guarantee is called in, it may be worth having your solicitor inspect the guarantee document and the underlying loan or lease (as well as the surrounding circumstances) as there are a number of ways by which even the best drafted guarantees can be defended or liability thereunder reduced. For example, in the event that a personal guarantee has been signed by more than one party, and the creditor seeks to rely on that guarantee against only one of the guarantors, that guarantor can (if legal proceedings issue against him) seek to join the co-guarantors as co-defendants in order to force them to contribute. Even if recovery is not viable against those co-guarantors, tactically it can be of use in reducing the value of the creditor’s claim and increasing the chance of an acceptable settlement.
If you are interested in obtaining legal advice on this subject, please do not hesitate to contact one of our team.


Late Payments Regulations

The New Late Payments Directive is due to be transposed by 16th March 2013

One of the priority actions of the European Commission’s Communication of 26 November 2008 entitled ‘European Economic Recovery Plan’ is the reduction of administrative burdens and the promotion of entrepreneurship by, inter alia, ensuring that, as a matter of principle, invoices, particularly those owing to SMEs, for supplies and services are paid within 1 month to ease liquidity constraints.

The new directive was published on 16th February 2011. Provision is to be made for business-to-business contractual payment periods to be limited, as a general rule, to 60 calendar days. However, there may be circumstances in which undertakings require more extensive payment periods, for example when undertakings wish to grant trade credit to their customers. Specific rules are to be introduced regarding commercial transactions for the supply of goods or services by undertakings to public authorities, which should provide in particular for payment periods normally not exceeding 30 calendar days, unless otherwise expressly agreed in the contract and provided it is objectively justified in the light of the particular nature or features of the contract, and in any event not exceeding 60 calendar days.

The key amendments from the earlier Directive relate to:
1. The increase of the rate of interest to 8% over the ECB reference rate,
2. The compensation award where interest payable – fixed payment of €40 plus further compensation for legal fees, employing a debt collection agency, etc;
3. The requirement that public authorities are not permitted to delay payment beyond 60 days;
4. The publication of a list of prompt payers;
5. The restriction of all verification processes to a 30 day period; and
6. The expedited period of redress for unchallenged debts being set at 90 days.

In the SME sector and payments between undertakings, the reality is that terms and conditions are not always properly drafted into the terms of sale and supply, and furthermore a culture has developed in Ireland, particularly in the context of the recession, of parties not paying on time and holding out until debt collection proceedings are threatened or issued. With the lack of credit available to the SME sector, SMEs are using the non-payment of creditors as a form of credit to operate their own businesses and manage their cash-flows. Only time will tell of the new changes laid down by the Directive will improve the manner in which payments in commercial transactions between undertakings or between undertakings and public authorities will be made.

It is hoped that the Irish government will have learned from the experiences of the SME sector in the past few years and take on board their concerns when adopting the Directive into law here. In order to really have any impact on business here the proposed regulations must take the discretionary aspect of whether to charge interest on late payments out of the equation so that interest must be charged as a matter of law, otherwise the objective of maintaining business relationships between contracting parties will result in no interest or compensation being charged by the creditor whatsoever and the status quo continuing.

For further information on this topic, please contact a member of our team.


The Irish Financial Crisis Effects on Irish Banks

The Irish Financial Crisis Effects on Irish Banks and Subsequent Misapplication of Interest Rates

In 2008, Ireland experienced its first significant increase in unemployment in over a decade. Irish banks began reporting arrears on their loan books, and with confidence evaporating due to the global financial crisis, were faced with the prospect of significant and crippling losses. This was compounded due to the difficulty in accessing short term inter-bank lending, on which Irish banks had become heavily reliant upon for their funding during the Celtic Tiger and perhaps even more so during the years of the property bubble from 2002 to 2008.
The effects of the financial crisis on Irish banks were significant. Firstly, the cost of borrowing for banks increased significantly. Secondly, banks experienced higher levels of default (i.e. bad debts). A number of Irish banks and building societies folded or were taken into government ownership (Bank of Ireland, AIB, Anglo Irish Bank, EBS, Irish Life and Permanent and Irish Nationwide). The consequence of this was that the Irish banks lost their ability to control their levels of default as these were undertaken by external independent audits on behalf of regulators (stress/viability tests conducted by The Central Bank of Ireland and The European Central Bank).
Irish banks subsequently struggled to enhance their viability and encountered difficulties in generating income. Under normal circumstances banks have two main lines of income:
1. Non-interest income; or
2. Interest income.
Non-Interest Income
Non-interest income is generated by banks by imposing fees and charges on customers. However, Ireland is unique in that it is one of a very few European countries that limits banks ability to impose such charges on customers. Section 149 of the Consumer Credit Act 1995 introduced pricing controls on financial institutions seeking to introduce or increase consumer charges. Any entity proposing to impose or increase charges on customers must get permission to do so from the Central Bank of Ireland under the Act. Because of the Government bail-out of the banks this was not deemed a viable option for the banks to pursue. Therefore, the only way Irish banks could increase their income was by generating income from interest income.
Interest Income
Interest income is generated by the margin banks receive on loans to customers. Banks had traditionally priced loans off the inter-bank lending rate. When the inter-bank market contracted Banks were forced seek more expensive sources of funding loans to customers. This in turn compressed the margin that banks received on loans to customers. In response to this income erosion banks sought to increase the margin they received on loans.
The issue that arose for Irish banks in this respect was that a substantial amount of the Irish banks’ lending portfolios were either (a) impaired, or (b) on tracker rates. Consequently, the only avenue available to Irish banks was to review existing loans and seek where possible to maximise interest income from all viable sources. From a customer perspective, the main parties subject to this approach were:
1. Businesses and who had taken out commercial loans; or
2. New customers.
The strategy of the Irish banks at the time was for them to, whenever an opportunity arose, to renegotiate a loan with a view to increasing the margin with customers. The question which arises is whether the Irish banks have acted bona fides in this regard, and have renegotiated or reapplied interest rates on loans in a legitimate contractual manner or have they simply arbitrarily increased interest rates on customer’s loan facilities. The latter situation would result in a breach of the terms of the legal agreement between the bank and the customer. In the alternative, it could also amount to a misrepresentation on the part of the bank who misrepresented the terms and conditions of the loan agreement with the customer. It may also amount to a breach by the bank of their fiduciary duty to their customer, in failing to fully inform them of the terms and conditions of the loan.
Significantly, the Irish courts have showed a willingness to hold banks and individuals within banks to account. A recent high court decision delivered by Hogan J. Allowed an individual to bring a private prosecution against two IBRC bank officials under the offence of making a gain or causing a loss by deception . It should be noted that the circumstances in this case involved two bankers deliberately deceiving a borrower and falsely represented to him that IBRC would be prepared to continue in a process that would allow his business to continue trading in circumstances whereby the bank was actually aware that a receiver had been appointed. Although the actions of the bankers involved in this case were particularly heinous, it nonetheless shows a willingness on the part of the courts to hold banks to account whereby they have abused their position to the detriment of the borrower who foreseeable relies on their representations and actions.
We would urge customers to exercise vigilance in their dealings with banks and in a situation where their interest rates were affected following the financial crisis, certain banks issued letters detailing a change in the bank’s ‘Cost of Funds’ meant that they were forced to alter their methods of calculating interest rates on certain accounts. Although this was allowable in certain circumstances, depending on the interest rate initially agreed to be applied to the customer’s facilities, this would have been precluded from the contractual agreement between the customer and the bank.


Placing A Company In Examinership – The Legal Process


The time-frame of the legal process involved from the point where the solicitor initially meets with the Petitioner in the first instance to the point where the legal team and clients are present in the High Court presenting an Examinership Petition before a High Court judge can be very short indeed, a matter of weeks in some cases to a matter of days or hours in others. The time required to prepare the Company for an Examinership process often depends on the circumstances of the Company and the activity of its creditors in seeking to enforce other legal remedies to recover their debts.

For example, if a bank appoints a Receiver to manage the Company’s assets once it establishes that the Company is insolvent or that its security over the Company’s assets may be in some danger, a Petitioner has only a period of 3 days in which to petition the High Court to appoint an Examiner instead of the Receiver provided the Petitioner meets the minimum requirements to ask for the High Court’s protection for the company from its circling creditors.

If the company is placed in Examinership it will be protected by the Court for a period of at least 70 to 100 days which can be extended further by the Court if the Examiner requires more time to conclude a scheme of arrangement (which shall include a fresh investment of capital in the company in Examinership) or if there are other reasonable grounds for doing so.

Company must be ‘Insolvent’

It is important to note that only an ‘insolvent’ company can be placed under the protection from its creditors by the High Court in Examinership. An insolvent company is a company that cannot pay its debts as they are falling due and where there are insufficient assets in the Company to discharge its liabilities.

The Independent Accountant appointed to review the Company’s affairs and financial position must conclude that the company is in fact ‘insolvent’ before a Petition to have the Company placed in Examinership can be even considered.

Persons Entitled to Apply to the Court

Section 2 of the Companies (Amendment) Act 1990, as amended provides that the following parties have the legal capacity to petition the High Court to place an insolvent company into Examinership:

• the company itself;
• the directors of the company;
• a creditor, or contingent or prospective creditor (including an employee), of the company;
• members of the company holding at the date of the presentation of a petition under that section not less than one-tenth of such of the paid-up capital of the company as carries at that date the right of voting at general meetings of the company; or
• by all or any of the above parties, together or separately.

Legal Documentation

The initial application to place a company in Examinership is usually made on an “ex-parte” basis meaning that they are made without notice to any other party. At the directions hearing the Court will direct the Petitioning Company to place a variety of persons on ’notice’ of the application in advance of the full hearing on the Petition (which will usually include the Revenue Commissioners, the principal secured lenders and the largest trading creditors).

The following legal documentation will be required by the High Court to examine a Petition to place an insolvent Irish company under the protection of the Court by seeking to put the company into Examinership pursuant to the Companies (Amendment) Act 1990, as amended:

• Ex-Parte Application
• Petition from a person with standing to petition the High Court to seek to have the insolvent company placed under court protection (“the Petition”);
• Independent Accountant’s Report (“the IAR”);
• Verifying Affidavit from a director, creditor or other party confirming the contents of the Petition and the conclusions of the Independent Accountant’s Report (“the Verifying Affidavit”);
• Affidavit of Suitability to be sworn by a third party confirming the suitability of the nominated Examiner to be appointed as examiner and/or interim examiner of the Company (“the Affidavit of Suitability”); and
• Letter of Consent from the Nominated Examiner consenting to accept the appointment if the Court accepts the Petition and places the Company in Examinership.

Ex-Parte Hearing

The legal application process commences by way of an ex-parte application to the High Court for the following reliefs/orders from the Court:

1. An order admitting the insolvent company to the interim protection of the Court, together with an Order appointing the same insolvency practitioner as the Examiner to the company;
2. Directions as to the hearing of the Petition presented;
3. Directions as to parties on whom the Petition should be served and as to the mode and time of service;
4. Directions as to whether the Petition should be advertised and, if so, how it should be so advertised;
5. Such further or other orders on the Petition as the Court may seem appropriate; and
6. If the Court is satisfied that the forms have been met and that the Petitioning Company is a suitable subject of the Court’s protection the duty judge will set down a return date for a full hearing of the Petition and make certain orders that the main creditors of the Company are notified and that public adverts are placed in 2 daily newspapers and one local or regional newspaper circulating in the area where the Company carries on its main business. The period between the ex-parte application and the date of the full hearing of the Petition (10 to 14 days usually) is known as the “interim-period”. The Petitioner may ask the Court to appoint an “Interim Examiner” to the Company in this period. This is an exceptional order. The Petitioner will need to satisfy the duty judge that the appointment of an Interim Examiner is necessary in the particular circumstances of he Company and/or its undertaking. The Petitioner bears the onus of proof here and it is a fundamental error to assume that the appointment of an interim examiner is a foregone conclusion. If the particular circumstances of the Company warrant the appointment of an Interim Examiner, an application should be made on the day of presentation of the Petition for n order to appoint a nominated insolvency practitioner as the Interim Examiner until the full hearing of the Petition or such other date as the Court shall deem fit.

It is entirely within the Court’s discretion to appoint an Interim Examiner. Some of the suitable bases put forward for the appointment of an Interim Examiner are:

• The Interim Examiner should be appointed to continue / engage in immediate negotiations with the main lender.
• The Interim Examiner should be appointed to continue / engage in immediate negotiations with a landlord.
• The appointment of an Interim Examiner would have a material positive impact upon the attraction of further capital investment in the company.
• The risk of the extension of protection without the appointment of an identifiable interim examiner will result in instability of the supply of necessary deliveries of products to the company.
• The appointment of an Interim Examiner will benefit the employees of the company in some tangible way.
• Any other reason specific to the business and current position of the company that would lead the court to the conclusion that the appointment of an Interim Examiner for the interim period between the presentation of the Petition and the hearing return date would support the reasonable prospects of survival of the company and its undertaking.

Full Hearing

In advance of the full hearing (also known as the “second-return date”) of the Petition before the High Court, any notice party or creditor will have the opportunity to lodge a replying affidavit which the judge can examine in the context of the full hearing. Any objections to the Petition can be set out on affidavit and in some cases an alternative examiner may be nominated. .

In some cases a lender/bank will oppose the Petition on the second return date if it forms the view that the Examinership may be contrary to its interests which would be better served by way of the appointment of a Receiver / Manager pursuant to the rights likely contained in their debenture. This usually results in an adversarial contest where the interests of the secured creditor are set against the interests of the general body of creditors.

Counsel for the Petitioner must also satisfy the Court that all of the orders and directions given at the ex-parte hearing have been complied with and the Court will need to be satisfied that all of material considerations have been attended for the ‘examination’ of the company to continue.

The Court will hear submissions by Counsel for other notice parties or interested parties with standing. The Court may dismiss or accede to the Petition appoint the Examiner and make all such other appropriate orders as to the further conduct of the Examinership.

The Petition

The Petition is the foundation legal document which Counsel for the Petitioner will refer to when petitioning the Court to place the Company in Examinership. It usually contains the following material information:

• Background information to the Company’s demise and its trading history;
• Details of the company’s ownership and its directors information;
• The number of employees of the company and the number of jobs at stake;
• The impact that a winding up (or trading receivership) of the company would have on the employees and unsecured creditors of the Company if the Peition for Examinership fails;
• The prospect and likelihood of the survivial of company and its business if a scheme of arrangement can be established with its creditors; and
• A detailed analysis of the material information and conclusions drawn by the Independent Accountant as contained in the IAR (which is appended to the Petition).

The contents of the Petition are further verified by the Verifying Affidavit to be signed by the Petitioner or a representative of the Petitioner (see paragraph below entitled ‘The Verifying Affidavit’).

The Independent Accountant’s Report (IAR)

The likelihood of success or failure of the application is founded upon the evidence contained in the pre-petition report prepared by the Independent Accountant. The identity of the Independent Accountant is a matter for the Petitioner; however, in view of the vital importance of his report careful consideration should be given to retention of an experienced and knowledgeable insolvency practitioner. . The extension of protection of the High Court is a discretionary remedy and given that the High Court is burdened with a plethora of such applications, the Court examines critically the evidence and material submitted supporting the premise that there is a reasonable prospect of the (on-going) survival of Company.

The Petitioner must discharge its burden as to the onus of proof;

• that it is deserving of the extension of protection;
• that the extension of protection is necessary; and
• that it is reasonable to conclude that the company will emerge from the period of protection with the on-going prospect of survival.

The weight to be attached to the accountant’s opinion will depend on the degree and extent to which the author supports that opinion with his or her own objective reasoning and the appraisal of material or factors relied upon for reaching his or her conclusions. The presence of unsupported mere assertions in the IAR will likely lead to the refusal of the Petition.

Of specific importance for inclusion and robust analysis in the IAR are the following matters:

• The tax affairs of the company;
• The cost reduction plan(s);
• The turnover generation plan and any marketing initiatives to be employed;
• The previous dealings with the employees should be detailed in context of the reduction of the cost base as should the proposed future dealings with the employees. The IAR would benefit from a confirmation of the support of the employees for the ‘slimmed down’ business model and /or any proposed changes to the terms and conditions of the employees.
• A detailed treatment of the debt burden and dealings with the principal lender/bank;
• A detailed treatment of any leasehold burdens and dealings with the landlord(s);
• Outside investment: the IAR should address directly whether the Company will survive in the absence of the fresh capital or not. The Independent Accountant should provide his/her opinion, and the basis / assumptions for said opinion, as to the reasonable likelihood of the attraction of outside investment; and
• Creditor support for the Petition.

The Verifying Affidavit

Where a Company itself petitions the Court to place itself in Examinership, the contents of the written Petition made by the Company require verification by a suitable officer of the Company who can swear that the contents of the company’s Petition are true and accurate in all respects. Therefore, one or more of the directors of the company are best placed to swearing such an affidavit which will also be lodged with the Petition, the IAR and the other court documentation which is dealt with below.

The Affidavit of Suitability

This document should be sworn by an independent solicitor who knows the nominated Examiner and who can vouch for the ability of the nominated Examiner to conduct the examination of the relevant company in a professional and experienced manner. The form of wording typically found in such an affidavit includes the following averment on behalf of the deponent:
“I say and believe that [nominated examiner] has developed an expertise in insolvency matters over a long number of years in practice acting in examinership, liquidations, corporate recovery and general insolvency matters. From my previous dealings with him, I say that he is a suitably qualified person to act as Interim Examiner and/or Examiner of the above mentioned company should this Honourable Court so direct.”

Examiner’s Letter of Consent

Unless a formal signed letter of consent is presented to the Court from the nominated examiner consenting to act as the Examiner, he is unlikely to be appointed by the Court regardless of whether or not all of the other legal documentation is in order and the judge affords it the protection of the Court. Therefore it is important to ensure that such consent is available, particularly if a creditor wishes to appoint an alternative nominee Examiner for whatever reason.

Protection Period

The Court retains a close supervisory function during the period of protection. The Examiner is required to report regularly to the High Court.

From the date of the presentation of the Petition, an initial protection period of 70 days is given to the Company which means that no creditor can pursue any debts owned by the company during said period. If no scheme of arrangement has been finalised by the Examiner after 70 days then this period can be extended for a further 30 days bring the total protection period to 100 days. In special circumstances, and provided that the Court is satisfied with the Examiner’s explanations for a further extension, the 100 day protection period may be extended even further, however, this is more the exception than the rule.

If no scheme of arrangement can be formulated by the Examiner or a scheme is proposed but rejected by the majority of the creditors and/or the Court declines to approve same, then it is likely that a Receiver or a Liquidator will be appointed to the insolvent company at that juncture and the protection of the Court will lapse.

Circuit Court Examinerships

The Examinership process has saved numerous enterprises and the jobs they provide to their communities particularly in the last five years.. The process is complex, specialised and requires the input of suitably experienced professionals to deal with complicated matters in a time pressured environment. The substantial cost associated with such a process has been the subject of well-founded criticism as this cost burden may serve to exclude suitable SME enterprises from the process.

Legislation is to be enacted in the very near future providing for Examinership at Circuit Court level. This welcome initiative is designed to be more flexible and economical for SME companies seeking temporary protection to allow the restructuring of their business and to maintain badly needed employment in the Irish SME economy.


If you have any queries whatsoever regarding the Examinership legal process then please do not hesitate to contact Edward Johnston directly at



An Enduring Power of Attorney (“EPA”) is a legal document that gives control to certain named person or persons (Attorney/Attorneys) over the assets and property of the client.

The EPA also grants authority to the Attorney/Attorneys to make personal care decisions on behalf of the client, once the client is no longer fully mentally capable of taking decisions for themselves. Personal care decisions may include where the client will live and with whom the client will live, who he/she should see and what training or rehabilitation he/she should get. However, in creating the EPA, the client can specifically exclude any of those powers when preparing the written form of the Power of Attorney. The client can also make the Attorney/Attorneys powers subject to specified reasonable conditions and restrictions. For example, a client may have a specific wish for treatment or rehabilitation to be undertaken or not to be undertaken. Restrictions and conditions can also be imposed in relation to the sale of property.

The EPA doesn’t come into effect until the person making it (the Donor) loses mental capacity.

In order for the EPA to take legal effect it must be registered by the nominated Attorney/Attorneys. However, an Attorney/Attorneys can take certain decisions or actions in relation to matters of personal care pending registration once the application has been made.

An EPA can be revoked any time before it is registered.

The Attorney/Attorneys appointed should be trustworthy. Upon registration the Attorney/Attorneys actions are subject to little or no supervision. It is worth noting that a conflict of interest may arise for the Attorney/Attorneys where the Attorney is also a potential beneficiary in the client’s estate.

In a situation where no EPA exists and a client develops mental incapacity a client can be made a Ward of Court upon the application of a family member. The Court would then appoint a Committee to manage the client’s affairs.

If you require advice in relation to the above please contact Patrick O’Donoghue on 01 6344680 or by e-mail at