Moratorium
Companies Act
Circumstances in which floating charge is invalid
597. (1) Where a company is being wound up, a floating charge on the undertaking or property of the company created within 12 months before the date of commencement of the winding up shall, unless it is proved that the company immediately after the creation of the charge was solvent, be invalid.
(2) Subsection (1) does not apply to—
(a) money actually advanced or paid, or the actual price or value of goods or services sold or supplied, to the company at the time of or subsequently to the creation of, and in consideration for, the charge, nor
(b) interest on that amount at the appropriate rate.
(3) For the purposes of subsection (2), the value of any goods or services sold or supplied by way of consideration for a floating charge is the amount in money which at the time they were sold or supplied could reasonably have been expected to be obtained for the goods or services in the ordinary course of business and on the same terms (apart from the consideration) as those on which they were sold or supplied to the company.
(4) Where a floating charge on the undertaking or property of a company is created in favour of a connected person, subsection (1) shall apply to such a charge as if the period of 12 months mentioned in that subsection were a period of 2 years.
Other circumstances in which floating charge is invalid
598. (1) Where—
(a) a company is being wound up,
(b) the company was, within 12 months before the date of commencement of the winding up, indebted to any officer of the company or a connected person,
(c) such indebtedness was discharged whether wholly or partly by the company or by any other person, and
(d) the company created a floating charge on any of its assets or property within 12 months before the date of commencement of the winding up in favour of the officer or connected person to whom such company was indebted,
then (without prejudice to any rights or liabilities arising apart from this section) such charge shall be invalid to the extent of the repayment referred to in paragraph (c) unless it is proved that the company immediately after the creation of the charge was solvent.
(2) In this section, “officer” includes a spouse, civil partner, child or nominee of an officer and the reference in this subsection to a child of an officer shall be deemed to include a child of the officer’s civil partner who is ordinarily resident with the officer and the civil partner.
Voidance of dispositions of property, etc. after commencement of winding up
602. (1) This section applies to each of the following acts in any winding up of a company:
(a) any disposition of the property of the company;
(b) any transfer of shares in the company; or
(c) any alteration in the status of the members of the company,
made after the commencement of the winding up.
(2) Without prejudice to subsection (3), an act to which this section applies that is done without the sanction of—
(a) the liquidator of the company, or
(b) a director of the company who has, by virtue of section 677 (3) retained the power to do such act,
shall, unless the court otherwise orders, be void.
(3) Nothing in this section makes a person who does an act rendered void by this section liable for doing such act, being an act that was done by the person at the request of the company, unless it is proved that, prior to the person’s doing the act, the person had actual notice that the company was being wound up.
(4) If a company that is being wound up makes a request of a person to do an act referred to in subsection (3) and does not, at or before the time of making the request, inform the person that it is being wound up, the company and any officer of it who is in default shall be guilty of a category 2 offence.
(5) Nothing in subsection (4) shall be read as limiting any liability, civil or criminal, that, apart from this section, may attach to a company, or any officer of it, for making a request of the kind referred to in that subsection, irrespective of the consideration that the relevant facts have been communicated to the person concerned or that those facts are otherwise in the knowledge of that person.
Voidance of executions against property of company
603. Unless the court orders otherwise, where a company is being wound up, each of the following shall be void, namely, any—
(a) attachment,
(b) sequestration,
(c) distress, or
(d) execution,
put in force against the property or effects of the company after the commencement of the winding up.
Unfair preference: effect of winding up on antecedent and other transactions
604. (1) Subsection (2) applies to each of the following acts, namely, any:
(a) conveyance;
(b) mortgage; or
(c) delivery of goods, payment, execution or other act,
relating to property made or done by or against a company, which is unable to pay its debts as they become due, in favour of—
(i) any creditor of the company, or
(ii) any person on trust for any such creditor.
(2) An act to which this subsection applies, that is done with a view to giving the creditor referred to in subsection (1)(i), or any surety or guarantor for the debt due to such creditor, a preference over the other creditors of the company, shall be deemed an unfair preference of its creditors and be invalid accordingly if—
(a) a winding up of the company commences within 6 months after the date of the doing of the act, and
(b) the company is, at the time of the commencement of the winding up, unable to pay its debts (taking into account the contingent and prospective liabilities).
(3) Any conveyance or assignment by a company of all its property to trustees for the benefit of all its creditors shall be void.
(4) An act to which subsection (2) applies in favour of a connected person which was done within 2 years before the commencement of the winding up of the company shall, unless the contrary is shown, be deemed in the event of the company being wound up—
(a) to have been done with a view to giving such person a preference over the other creditors, and
(b) to be an unfair preference, and be invalid accordingly.
(5) Subsections (2) and (4) shall not affect the rights of any person making title in good faith and for valuable consideration through or under a creditor of the company.
Liabilities and rights of persons who have been unfairly preferred
605. (1) Where—
(a) a company is being wound up, and
(b) any act done is void under section 604 as an unfair preference of a person interested in property mortgaged or charged to secure the company’s debt,
then (without prejudice to any rights or liabilities arising apart from this section) the person preferred shall be subject to the same liabilities and shall have the same rights as if he or she had undertaken to be personally liable as surety for the debt to the extent of the charge on the property or the value of his or her interest, whichever is the less.
(2) The value of the foregoing person’s interest shall be determined as at the date of the act constituting the unfair preference, and shall be determined as if the interest were free of all encumbrances other than those to which the charge for the company’s debt was then subject.
(3) On any application made to the court in relation to any payment on the ground that the payment was an unfair preference of a surety or guarantor, the court—
(a) may determine any questions relating to the payment arising between the person to whom the payment was made and the surety or guarantor and grant relief in respect thereof, and
(b) for that purpose, may give leave to bring in the surety or guarantor as a third party as in the case of an action for the recovery of the sum paid,
and jurisdiction to do any of those things may be exercised notwithstanding that it is not necessary to exercise such jurisdiction for the purposes of the winding up.
(4) Subsection (3) shall apply, with the necessary modifications, in relation to transactions other than the payment of money as it applies to payments.
Restriction of rights of creditor as to execution or attachment in case of company being wound up
606. (1) Subject to subsections (2) to (4), where a creditor has—
(a) issued execution against the goods or lands of a company, or
(b) attached any debt due to the company,
and the company is subsequently wound up, the creditor shall not be entitled to retain the benefit of the execution or attachment against the liquidator in the winding up of the company unless the creditor has completed the execution or attachment before the commencement of the winding up.
(2) In a case where a creditor has had notice of a meeting having been called at which a resolution for voluntary winding up of the company concerned is to be proposed, then, for the purposes of subsection (1), the date on which the creditor so had notice shall be substituted for the date of the commencement of the winding up.
(3) A person who purchases in good faith, under a sale by a sheriff, any goods of a company on which an execution has been levied shall, in all cases, acquire a good title to them against the liquidator.
(4) Notwithstanding subsection (1), the rights conferred by that subsection on the liquidator may be set aside by the court in favour of the creditor to such extent and subject to such terms as the court thinks fit.
(5) For the purposes of this section—
(a) an execution against goods shall be deemed to be completed by seizure and sale,
(b) an attachment of a debt shall be deemed to be completed by receipt of the debt,
(c) an execution against land shall be deemed to be completed by seizure, and
(d) an execution in the case of an equitable interest shall be deemed to be completed by the appointment of a receiver.
(6) Nothing in this section shall give any validity to any payment constituting an unfair preference.
(7) In this section—
“goods” includes all chattels personal;
“sheriff” includes any officer charged with the execution of a writ or other process.
Duties of sheriff as to goods taken in execution
607. (1) Subject to subsection (5), where any goods of a company are taken in execution and, before the sale of them or the completion of the execution by the receipt or recovery of the full amount of the levy, notice is served on the sheriff that, in relation to the company—
(a) a provisional liquidator has been appointed, or
(b) a winding-up order has been made, or
(c) a resolution for voluntary winding up has been passed,
the sheriff shall, on being required to do so by the liquidator, deliver to the liquidator the goods and any money seized or received in part satisfaction of the execution.
(2) However, in the foregoing case, the costs of the execution shall be a first charge on the goods or the money so delivered, and the liquidator may sell the goods or a sufficient part of them for the purpose of satisfying that charge.
(3) Subject to subsection (5), where under an execution in respect of a judgment for a sum exceeding €1,000 the goods of a company are sold or money is paid in order to avoid sale, the following procedures shall be adopted by the sheriff, namely, he or she shall—
(a) deduct the costs of the execution from the proceeds of the sale or the money paid,
(b) retain the balance for a period of 14 days after the date of the sale or the payment of the money,
and, if the events referred to in subsection (4)(a) and (b) occur, the sheriff shall pay the balance to the liquidator of the company who shall be entitled to retain it as against the execution creditor.
(4) The events mentioned in subsection (3) are—
(a) within the period referred to in subsection (3)(b), notice is served on the sheriff of a petition for the winding up of the company having been presented or of a meeting having been called at which there is to be proposed a resolution for the voluntary winding up of the company, and
(b) an order is made or a resolution is passed, as the case may be, for the winding up of the company.
(5) Notwithstanding subsection (1) or (3), the rights conferred by either subsection on the liquidator may be set aside by the court in favour of the creditor to such extent and subject to such terms as the court thinks fit.
(6) The notice referred to in subsection (1) or (4) shall be in writing and addressed to the sheriff and may be served by being delivered by hand, or by pre-paid registered post, at his or her office.
(7) In this section “goods” and “sheriff” have the same meaning as they have in section 606 .
Power of the court to order return of assets which have been improperly transferred
608. (1) The court has the following power where, on the application of a liquidator, creditor or contributory of a company which is being wound up, it can be shown to the satisfaction of the court that—
(a) any property of the company of any kind whatsoever was disposed of either by way of conveyance, transfer, mortgage, security, loan, or in any way whatsoever whether by act or omission, direct or indirect, and
(b) the effect of such disposal was to perpetrate a fraud on the company, its creditors or members.
(2) That power of the court is to order, if it deems it just and equitable to do so, any person who appears to have—
(a) the use, control or possession of the property concerned, or
(b) the proceeds of the sale or development of that property,
to deliver it or them, or pay a sum in respect thereof, to the liquidator on such terms or conditions as the court thinks fit.
(3) This section shall not apply to any conveyance, mortgage, delivery of goods, payment, execution or other act relating to property made or done by or against a company to which section 604 applies.
(4) In deciding whether it is just and equitable to make an order under this section, the court shall have regard to the rights of persons who have bona fide and for value acquired an interest in the property the subject of the application.
(5) This section is in addition to, and not in substitution for, any restitutionary or other relief by way of recovery (including the remedy of tracing) that is available to a liquidator or any other person.
Vesting of property of company in liquidator
614. (1) Where a company is being wound up, the court may, on the application of the liquidator, by order, direct that all or any part of the property of whatsoever description belonging to the company or held by trustees on its behalf shall vest in the liquidator by his or her official name.
(2) On such an order being made—
(a) the property to which the order relates shall vest accordingly in the liquidator, and
(b) the liquidator may, after giving such indemnity, if any, as the court may direct,
bring or defend in his or her official name any action or other legal proceeding which relates to that property or which it is necessary to bring or defend for the purpose of effectually winding up the company and recovering its property.
Disclaimer of onerous property in case of company being wound up
615. (1) In this section “onerous property” means property (whether tangible or intangible) that is property of a company which is being wound up and that falls into one or more of the following categories:
(a) land of whatsoever kind burdened with onerous covenants;
(b) shares or stock in any company or undertaking;
(c) an unprofitable contract;
(d) any other property which is unsaleable or not readily saleable by reason of its binding the possessor of it to the performance of any onerous act or to the payment of any sum of money.
(2) Subject to subsections (4) and (7), the liquidator of the company concerned may, with the leave of the court and subject to the provisions of this section, by writing signed by him or her, at any time within the relevant period, disclaim onerous property; such leave may be granted by the court and the property disclaimed notwithstanding that the liquidator—
(a) has endeavoured to sell or has taken possession of the property, or
(b) has exercised any act of ownership in relation to it.
(3) In subsection (2) “relevant period” means the period of 12 months after the date of the commencement of the winding up of the company or such extended period as may be allowed by the court.
(4) Where the existence of onerous property has not come to the knowledge of the liquidator of the company concerned within one month after the date of the commencement of the winding up, the power under this section of disclaiming the property may be exercised at any time within 12 months after the date on which the liquidator has become aware thereof or such extended period as may be allowed by the court.
(5) The disclaimer shall operate to determine, as from the date of disclaimer, the rights, interests and liabilities of the company, and the property of the company, in or in respect of the property disclaimed; however it shall not, except so far as is necessary for the purpose of releasing the company and the property of the company from liability, affect the rights or liabilities of any other person.
(6) The court, before or on granting leave to disclaim, may require such notices to be given to persons interested and impose such terms as a condition of granting leave, and make such other order in the matter as the court thinks just.
(7) The liquidator shall not be entitled to disclaim any property under this section in any case where—
(a) an application in writing has been made to the liquidator by any person interested in the property requiring the liquidator to decide whether he or she will or will not disclaim, and
(b) the liquidator has not, within a period of 28 days after the date of receipt of the application or such further period as may be allowed by the court, given notice to the applicant that he or she intends to apply to the court for leave to disclaim.
(8) Any person damaged by the operation of a disclaimer under this section shall be deemed to be a creditor of the company concerned to the amount of the damages, and may accordingly prove the amount as a debt in the winding up.
Rescission of certain contracts and provisions supplemental to section 615
616. (1) The court may, on the application of any person who is, as against the liquidator, entitled to the benefit or subject to the burden of a contract made with the company, make an order rescinding the contract on such terms as to payment by or to either party of damages for the non-performance of the contract, or otherwise as the court thinks just.
(2) Any damages payable under such an order to any such person shall be deemed to be a debt proved and admitted in the winding up.
(3) Subject to subsection (6), the court, on an application by any person who either claims any interest in any property disclaimed under section 615 or is under any liability not discharged by this Act in respect of any property so disclaimed, has, on hearing any such persons as it thinks fit, the following power.
(4) That power of the court is to make an order for the vesting of the property in, or the delivery of the property to, any person entitled to it, or to whom it may seem just that the property should be delivered by way of compensation for any liability of the foregoing kind, or a trustee for him or her, and on such terms as the court may think just.
(5) On any such vesting order being made, the property comprised therein shall vest accordingly in the person named in the order in that behalf without any conveyance or assignment for the purpose.
(6) Where the property disclaimed under section 615 is of a leasehold nature, the court shall not make a vesting order under this section in favour of any person claiming under the company, whether as under-lessee or as mortgagee by demise, except upon the terms of making that person—
(a) subject to the same liabilities and obligations as those to which the company was subject under the lease in respect of the property at the commencement of the winding up, or
(b) if the court thinks fit, subject only to the same liabilities and obligations as if the lease had been assigned to that person at that date,
and in either event (if the case so requires), as if the lease had comprised only the property comprised in the vesting order.
(7) Any mortgagee or under-lessee declining to accept the making of a vesting order upon such terms as are referred to in subsection (6) shall be excluded from all interest in and security upon the property concerned.
(8) If there is no person claiming under the company who is willing to accept the making of an order upon such terms as are referred to in subsection (6), the court shall have power to vest the estate and interest of the company in the property concerned in any person liable either personally or in a representative character, and either alone or jointly with the company, to perform the lessee’s covenants in the lease, freed and discharged from all estates, encumbrances and interests created therein by the company.
The text in italics on this page is sourced from the Irish Statute Book and is re-published under the Licence for Re-Use of Public Sector Information made pursuant to Directive 2003/98/EC Directive 2013/37/EU of the European Parliament and of the Council on the re-use of public sector information transposed into Irish law by the European Communities (Re-Use of Public Sector Information) Regulations 2005 to 2015.