Irish High Court makes determination on the opening of "Main Insolvency Proceedings" in Ireland

A recent High Court decision in Mac Interiors[1] determined whether a company needs to be formed and registered in this jurisdiction in order to enter into the examinership rescue process.

Mac-Interiors Limited (the "Company”), which has its registered office in Newry, Co. Down, Northern Ireland, presented a petition to the Irish High Court for the appointment of an examiner. Where the registered office of the Company is outside Ireland  it does not fall within the definition of a 'company' under the Companies Act, 2014 being one which is formed and registered within the State.

In order to petition here, the Company invoked the direct application of Article 3.1 of the EU Insolvency Regulation Recast, EU 2015/848 (the "Insolvency Regulation”), which does not permit distinguishing companies on the basis of their place of incorporation.

Article 3.1 provides that:

"The courts of the Member State within the territory of which the centre of the debtor's main interests is situated shall have jurisdiction to open insolvency proceedings (‘main insolvency proceedings")"

However, the Insolvency Regulation also provides that the place of the registered office shall be presumed to be the centre of main interests, in the absence of proof to the contrary.

The Company submitted that it has its centre of main interests (“COMI”) in Ireland and so the Court had jurisdiction to open main insolvency proceedings here and appoint the examiner.

In considering the Company's COMI the Court was advised that:

• the Company’s administrative and marketing headquarters are in Ireland;
• the majority of physical board and management meetings take place at the Dublin office;
• the Company is tax resident in Ireland and files tax returns only in Ireland;
• the Company has had a substantial business presence in Ireland and historically carried out most of its trade in Ireland;
• Approximately 66% of the Company’s creditor base by value and 65% in number are based in Ireland;
• All of the Company’s employees are resident in Ireland and all employment contracts are governed by Irish law; and
• The Company banks in Ireland.

On the basis of the evidence presented, the Court was satisfied that third parties, most importantly creditors, regard Dublin as the centre from which the Company trades and where its affairs are administered. Accordingly, the presumption in favour of the place of the registered office was rebutted and the Court determined that the Company has its centre of main interests in Ireland.

This decision has brought welcome clarity to what was previously an undetermined point regarding the jurisdiction of the Court to appoint an Examiner over a non-Irish company.

[1] In the Matter of Mac-Interiors Limited [2023] IEHC 395

Written by: Mark Woodcock and Ciara Gilroy on the 19th of July 2023