The Office of the Director of Corporate Enforcement (ODCE) recently issued guidance on the effect the COVID-19 pandemic has on its insolvency-related functions. The guidance provides a statement on how the ODCE will assess the actions of company Directors, where the company has gone into a liquidation because of the COVID-19 pandemic.

The ODCE will continue to review each case on its merits but has stated that they will consider the following when companies do enter liquidation over the next few months:

• the adequacy of the Directors’ processes and procedures for monitoring the company’s financial position on an ongoing basis.
• whether, and if so at what point, Directors sought professional advice.
• the basis upon which the directors formed the view that the company would be able to trade out of its difficulties within a reasonable timeframe.
• the length of time that trading continued after it had become apparent, or should have been apparent, that the company was insolvent.
• the extent to which the company’s financial position continued to deteriorate, as well as the nature of any additional liabilities that accrued during the period which the Directors knew, or ought to have known, that the company was insolvent.
• In cases where there are material tax liabilities, the extent to which such liabilities arose and the extent to which the company availed of Revenue Commissioners requirements for deferred payments and warehousing liabilities.
• the steps taken to reduce costs and/or to restructure the business.

In the context of the subject matter of this statement, the ODCE notes the Revenue Commissioners’ stated position that a declaration made as part of an application for the COVID-19 Temporary Wage Subsidy Scheme is not a declaration of insolvency on the part of the company.

Generally, the ODCE do not consider Directors to have acted irresponsibility in situations where the company has become insolvent due to events largely outside their control.

As stated above it is expected by the ODCE that Directors will act in a responsible manner. Please contact us, if your company is having financial troubles and we can assist you in creating a financial plan to restructure your business.

Regards

Eddie O’Shea