Company Liquidation in Ireland
Company Liquidation in IrelandUpdated on Wednesday 21st August 2019
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How can a company be liquidated in Ireland?
In case a company in Ireland cannot continue its business activities, the procedure of liquidation must be initiated. There are three ways an Irish company can be liquidated according to the Companies Act: through the members’ voluntary liquidation, through the creditors’ voluntary liquidation and through compulsory liquidation.
Our Irish law firm has consultants with an extensive experience in company liquidation cases, who are ready to provide you with legal assistance no matter the chosen company liquidation method. Our team of lawyers in Ireland can represent both local and foreign investors in the procedure of company liquidation.
What are the steps for company liquidation in Ireland?
If the company has funds to pay its debts, the procedure of members’ voluntary liquidation can be instituted and it begins with a general meeting of the shareholders. The main objectives of this meeting are the following: starting the process of liquidation and the appointment of a liquidator. The company’s directors must declare that all the claims can be covered in maximum one year. This is the so called Declaration of Solvency.
The appointed liquidator has all the powers of the former management and can take only the decisions necessary to carry the liquidation process. Its main target is to cover all the claims of the creditors in less than a year and only after that, distribute the remaining assets to the debtors.
The creditors’ voluntary company liquidation is the result of a decision taken during the company's general meeting and the creditors’ general meeting. These are due to the observation of the debts encountered by the company. After taking the decision, a list with the company’s assets is drafted and presented in front of the company’s director during a second meeting.
A liquidator is appointed in order to take all the necessary decisions and start the required actions related to the liquidation. The creditors can also appoint an alternative liquidator and a committee of five inspectors. At its turn, the company can appoint another three inspectors in addition to those selected by the creditors. The inspectors have the power to decide if the liquidator must continue the company’s activity and the assigned remuneration for him.
The compulsory liquidation is decided by the High Court of Ireland based on a petition from the company’s creditors. The Court also appoints the liquidator which has the role of checking the company’s assets, use them, if necessary, in order to cover the claims received from the creditors and divide the remaining assets to the shareholders.
The liquidator is under the Court’s strict control, while the liquidator appointed in the voluntary company liquidation in Ireland has more freedom of action. For more details about each type of company liquidation, do not hesitate to address to our team of Irish lawyers.
Who can have the quality of liquidator in Ireland?
As mentioned earlier, the company liquidation procedure in Ireland can be done by an appointed liquidator. The person who can have this quality is established under the Companies Act 2014; the exact requirements that a liquidator must meet are prescribed under the Sections 633 and 634 of the Act, which can be presented by our team of lawyers in Ireland.
It is also necessary to know that the rules for appointing an Irish liquidator are overseen by the Irish Auditing and Accountancy Standards Authority (IAASA). In order to appoint a liquidator in Ireland, the person must meet one of the below mentioned requirements:
- • the person has to be a member of a accountancy institution;
- • the future liquidator may also act in this function if he or she is a practicing solicitor;
- • the person is a member of a professional institution that is recognized by the IAASA;
- • the person has obtained his or her qualifications under the law of another country (however, it has to be a member state of the European Economic Area);
- • the person has gained practical experience in the liquidation procedures applicable here;
- • the person has an in-depth knowledge of the legislation applicable in this sense.
Who can’t be a liquidator in Ireland?
The person who can handle the company liquidation in Ireland can come from a wide range of business activities, as presented earlier. However, even if the person has the necessary experience and knowledge in the field, he or she may not act as the company liquidator provided that the person has a close relation with the company that will be liquidated or with the company’s founders or shareholders. In this case, it is necessary to know that the Irish legislation stipulates the following:
- • the legal grounds that forbids a person to be the company’s liquidator are prescribed by the Section 839 of the Companies Act;
- • a person can’t be appointed as a liquidator if, in the last 24 months prior to the liquidation of the company, he or she was an employee of the company;
- • close family members of the shareholders, such as brothers, sisters, parents, children, spouses, civil partners, can’t have this quality;
- • it is also forbidden to be a company’s liquidator provided that the person is a partner of the company;
- • a person who is considered bankrupt can’t be appointed as a liquidator.
What are the statistics on company liquidation in Ireland?
The number of companies that applied for starting the liquidation procedure in Ireland decreased in the last years, this showing that the overall business environment in this country is stable. The majority of the company liquidation procedures in Ireland were started through creditors’ voluntarily liquidations. Some of the most important data on this subject is presented below:
- • at the level of the first 6 months of 2018, there were a total of 435 corporate insolvencies;
- • this represents a decrease of 4% compared to the same period of 2017;
- • out of the total of 435 insolvencies, 297 were represented by creditors’ voluntary liquidations;
- • in the same period of time, there were 43 court liquidation appointments;
- • Ireland also registered a total of 83 receiverships, accounting for 19% of the total insolvency procedures registered in the given period of time;
- • in the first quarter of 2018, there were 188 corporate insolvencies;
- • this represented a decrease of 14% compared to the first quarter of 2017.
According to the data registered by the Irish courts, at the level of 2017, a total of 359 liquidation procedures were concluded through the court. This number refers to the resolved liquidation claims that were handled through the assistance of a local court; it is also important to know that in that year, the country registered a total of 1,775 out-of-court resolved claims. Our team of Irish lawyers can represent businessmen in any of the legal proceedings available for this particular situation.
How long does it take to liquidate a company in Ireland?
The duration of the company liquidation procedure in Ireland can take from several months to several years depending on the size of the company, the number of employees, the nature of the claims which must be settled. Our attorneys in Ireland are specialized in these types of situations and can help you with the process of closing your company.
As a general rule, most of the liquidation procedures in Ireland can be terminated in a period of approximately one year. Provided that we refer to large companies, the procedure can take even longer; businessmen are invited to contact our Irish law firm for more information on the liquidation procedures available here; our attorneys can represent businessmen in the formalities for liquidating a local company and may offer legal assistance throughout any associated procedures.