Insolvency and Corporate Restructuring

What We Do

Niall Farrell and Elaine Farrell run our Insolvency and Corporate Restructuring Department.

We advise you on all aspects of insolvency or company restructuring.

  • Options available to your Company if it is insolvent.
  • Options available to your Company if it is solvent.
  • Options available to you personally.

What is insolvency and is your Company insolvent?

There are two tests for establishing insolvency:

  • The “cash flow” test which requires you to show that your company is unable to pay its debts as they fall due for payment.
  • The “balance sheet” test which requires you to show that the value of the company’s assets is insufficient to meet its liabilities (financial obligations).

Do you think your Company satisfies the tests above? If so, there are a number of formal insolvency and  winding up procedures available to your Company:

  1. Examinership
  2. Receivership
  3. Creditors’ Voluntary Liquidation
  4. Compulsory Liquidation


The Examinership procedure is intended to facilitate the rescue of insolvent and nearly insolvent companies. Examinership enables the company to ask the High Court for a period of 70–100 days ‘protection of the court’. In order for a company to be suitable for Examinership, the High Court has to be satisfied that the company would have a reasonable prospect of survival. In essence, the business must either be viable or have the potential to be made viable. The High Court, once satisfied that there is a reasonable prospect of survival, appoints an Examiner whose function is to formulate proposals for a compromise (or scheme of arrangement) between the company, its members and its creditors. During the period of protection, the creditors are restrained from exercising their rights to pursue claims. The company will continue to trade during the protection period and the directors remain in control of and responsible for the day to day running of the company. It is important to note that not all companies are suitable for Examinership and that the other three options above may be more suitable for your company.


A secured creditor, such as a bank or building society, is given the authority by a company to chose an external person (the receiver) to take over that administration of the company and/or all or part of its assets temporarily. The receiver’s goal is dispose of those assets to satisfy the debt involved. The appointment of the receiver does not change the legal status of the company. However, the directors do cease to control the assets over which the receiver has been appointed.


In this form of liquidation, the directors are responsible for the preparation of an estimated statement of the company’s affairs setting out its assets and liabilities. The process of a creditors’ voluntary winding up commences with a resolution by the members that the company be wound up voluntarily. A shareholders’ resolution is then held and once shareholder approval is received; the company is put into liquidation. A liquidator is appointed at a creditors’ meeting and the liquidator is then answerable to and reports to the creditors of the company.


Where a company is unable to pay its debts as they fall due or where it is just and equitable that the company be wound up, the High Court can order the winding up of a company. A petition to the court for a winding up order can be presented by a creditor, the company itself or a member of the company. A winding up order places the company in liquidation and appoints an Official Liquidator. The Official Liquidator will then wind up the affairs of the company which involves the distribution of the company’s assets.



Is your company solvent?

This form of liquidation arises where the members of a solvent company decide for their own commercial reasons on the voluntary winding up of of the company and distribution of its assets. The company must be solvent and any debts must be paid in full. There are a few steps to members’ voluntary liquidation procedure. The Directors of the company must file a Declaration of Solvency in the Companies Registrar, which is simply a sworn declaration saying that the company will be able to pay its debts in full within one year from the commencement of the liquidation. A statement of assets and liabilities is attached to the Declaration. A report must also be prepared by an independent person (usually an auditor) and appended to the statement of assets and liabilities. The directors’ powers cease on the appointment of a liquidator and the liquidator is answerable to and reports to the members of the company.

Insolvency procedure available to you as a person:


Bankruptcy is available to you where you personally are unable to pay your debts. Where you consider yourself insolvent and where you can prove that the liquidation of your estate will produce at least €20,000, you can petition the court for an order declaring yourself bankrupt.

Declaring bankruptcy should be thought about very carefully as the consequences of bankruptcy include a number of restrictions placed on you as a person, such as the following:

  • All your assets will be under the control of an Official Assignee.
  • Your bank accounts will be frozen, except for one current account in which you can keep a balance of up to €1,000 for general living expenses.
  • You are prohibited from acting as a director of a company.
  • Some professional bodies disqualify members who are adjudicated bankrupt.
  • Bankruptcy may be discharged after 1 year.
  • All of their unsecured creditors give their consent.
  • They have agreed and paid a settlement with at least 60% of their unsecured creditors.

If we can help you in relation to any of the above, please do not hesitate to contact Niall Farrell at or Elaine Farrell at or call 045 431542.