Dáil Éireann Debate, Wednesday - 13 May 2015
24. Deputy Mattie McGrath asked the Minister for Jobs, Enterprise and Innovation if the Companies Act 2014, which is to be commenced on 1 June 2015, will make provision for regulating aggressive and intimidating actions by receivers, as part of their efforts to recoup assets; his views that such behaviour is a growing problem; and if he will make a statement on the matter. [18401/15]
View answerReceiverships arise as a result of private contractual relationships, normally between a company and a lending institution. Receivership is a remedy that derives from the courts of equity. The law in relation to receivership is largely made up of rules which the courts have developed by applying general private contract law and equitable principles.
The Companies Act, 2014, which will commence on 1 June 2015, substantially re-enacts the existing law on receivership. The most important change to the existing law is the codification of the powers of receivers in section 437 of the Act, which until now has been contained in case law. This change is in line with the position of other common law countries.
Under the Companies Act, 2014 additional transparency and protection exists as the receiver has specific statutory duties under section 439 which provide that:
- receivers must achieve the best price reasonably obtainable at the time of sale; and
- the receiver must not sell by private contract a non-cash asset of a company to a person who is or who, within three years prior to the date of appointment of the receiver, has been, an officer of the company unless the Receiver has given 14 days notice of his intention to do so to all creditors of the company who are known to him or who have been intimated to him.
Receivers also have a duty to provide certain information to the Registrar of Companies and the ODCE.
The Act also prevents certain persons from being appointed as Receivers (section 433), such as persons who are undischarged bankrupts and connected persons (parent spouse etc of an officer of the company), among others. Breach of a receiver’s statutory duties may result in the receiver being held personally liable for any loss incurred.
As part of its Work Programme 2014 - 2016 the Company Law Review Group will be examining the area of receivership law and I look forward to receiving its Report in due course.
