2. Insolvency review An ODCE perspective Kevin Prendergast Corporate Compliance Manager, ODCE.

3. Presentation Overview Insolvency and the restriction process How ODCE interacts with liquidators Current ODCE experience

4. Insolvency and the restriction process ODCE receives reports on every liquidation Liquidator must take restriction proceedings (Section 150 CA1990) unless relieved by ODCE Liquidator can choose not to seek relief Liquidator can choose to pursue disqualification action

5. Insolvency and the restriction process Restriction typically lasts for five year period Name recorded on register at CRO Any company of which they are a director must be adequately capitalised –Private company €63,487, plc €317,435 –Company limited by guarantee, must resign

6. Insolvency and the restriction process ODCE acts as filter to relieve Court of duty to examine all insolvencies Not relieving liquidator is not a finding of culpability Ultimately only the High Court can impose a restriction order

7. ODCE and Liquidators A joint process –Liquidators must report within 6 months Liquidators may be given more time to reach conclusions –Relief at this time Open communications

8. ODCE and Liquidators Vast majority of cases we are guided by liquidators –since 2003, ODCE has accepted recommendations to grant relief in over 95% of cases in the small number of cases where we refused relief when sought, the High Court restricted in 60% of these cases since 2003, we have also granted relief in another 2% of cases where the liquidator did not seek relief

9. ODCE and Liquidators With regard to the conduct of directors in general –we relieve liquidators in respect of 3 out of every 4 directors –In 2008 91% of cases involved relief from restriction proceedings –of the 1 in 4 who go to Court, 80% are restricted or disqualified –in 2007, restricted in 96% of cases heard

10. ODCE and Liquidators Reasons for not granting relief Decision Notice D/2002/3 –5.7 Criteria for Consideration of Reports Irresponsibility rather than Dishonesty

11. ODCE and Liquidators –Evidence of trading while insolvent –Level of debts/Revenue –Payment of non-preferential creditors (e.g. directors) –Failure to keep proper books being a contributory cause to insolvency –Accumulation of issues

12. ODCE and Liquidators The successful role of the Office –the 240 cases or so kept out of Court annually and –the close alignment between ODCE and Court decision-making

13. ODCE and Liquidators Law since 2001 has regularised matters for all liquidations Some 650 persons now restricted Liquidators aware of their obligations Dishonest and irresponsible directors sanctioned

14. Current ODCE experience Reports received from liquidators –Historic low of 273 in 2007 –Rose to over 400 in 2008 –By end of 2008 running at over 70 a month –Looking at in excess of 700 for 2009

15. Current ODCE experience Of the notified liquidator appointments in 2008 (596) –Almost 50% were in construction/property –This is broadly in line with 2007 proportions –Notified appointments up 85%

16. Current ODCE experience Unliquidated insolvent companies –Struck off register for failing to file returns and owing debts –Office monitors such strike-offs –Directors of such companies can face disqualification unless they can prove no debts owing

17. Current ODCE experience Companies have three options –Show evidence of no debts/debts paid off –Re-register companies with CRO, obtaining audit reports where necessary and paying all fees and penalties (may involve High Court) –Face disqualification proceedings –12 directors disqualified, one restricted in 2008

18. Further information Decision Notice D/2002/3 Information Notice I/2009/1 –Removal of need for subsequent reports after primary decision www.odce.ie

19. THANK YOU