Commercial Law Practitioner Essays - Insolvency, Bankruptcy

Commercial Law Practitioner Essays - Insolvency, Bankruptcy Commercial Law Practitioner Commercial Law Practitioner 2014 *47 Time Limits and the Appointment of ReceiversAn Analysis of Recent Authorities Mark Heslin* Time limits arise in many contexts in legal practice. A statute may allow a specific period for something to be done. A contract may require a particular act by a given time. Practitioners unilaterally set deadlines for a response, in default of which there will be specific consequences. For instance, a demand may seek payment immediately or by close of business, but what do those phrases mean? Can one validly demand immediate payment outside normal banking hours, and when do these start and end? This article proposes to examine the attitude of the courts to compliance with certain important time limits, and how disputes and ambiguities in relation to such phrases have been dealt with, particularly in the context of the appointment of a The Belohn Ltd (Belohn) owned and operated bars and a restaurant on the corner of Merrion Street and Merrion Row, Dublin, under the name Foley's. The company ran into financial difficulties and on October 10, 2012, its bank appointed a receiver and manager over Belohn's assets. On December 18, 2012, a challenge to the receiver's appointment was brought by Belohn's holding company, The Merrow Ltd (Merrow). Judgment was given in the High Court on the morning of March 22, 20131 appointment was void, a finding based primarily on a requirement in one of the relevant debentures that the bank appoint by writing under its seal a Receiver of the mortgaged property. The receiver's appointment had not been made under seal. by Mr Justice Gilligan. The court held that the receiver's Following the delivery of Gilligan J.'s judgment, the bank's solicitors made a demand on Belohn, later the same day, for the repayment of in excess of 4 million. At the same time, a demand was made on Merrow for in excess of 1 million then due. The demands, which were handed to the relevant director at 16.15 on March 22, required payment by 17.00. In the absence of payment being made, the bank, at 17.10, appointed the same receiver over all of Merrow's property and assets. The only assets of Merrow were its subsidiary, Belohn. The appointment at 17.10 on March 22 was not communicated to Merrow until approximately 16.30 on Sunday, March 24. Petition to Appoint Examiner Upon learning of the receiver's appointment, Merrow presented a petition in its name and that of Belohn seeking to appoint examiners to each company. The application was heard, ex parte, at about 21.00 at the home of Mr Justice Hogan on the evening of Sunday, March 24, 2013.2 petitioner impressed upon Hogan J. the importance of the petition being presented before midnight. Under s.2 of the Companies (Amendment) Act 1990 (the 1990 Act), the court may appoint an examiner upon a petition being presented. Section 3(6) of the 1990 Act specifies an important time limit, providing that the court shall not hear any petition if a receiver stands appointed to the company and has been so for a continuous period of at least 3 days prior to the Of particular interest is the analysis by Hogan J. of the three-day time limit by which a petition must be presented for the appointment of an examiner, following the appointment of a receiver, and the court's comments on any effort to frustrate the bringing of such petitions. The court heard that financial institutions often appoint receivers late on a Friday, because an application for the appointment of an examiner will depend, first, on the company learning that a receiver has been appointed, and, secondly, locating a duty judge over the weekend. The court found that if a receiver is appointed on a Friday, an application on the following Monday would be too late, having regard to s.18(h) of the Interpretation Act 2005. This provides: Where a period of time is expressed to begin on or be reckoned from a particular date, that day shall be deemed to be included in the period and, where a period of time is expressed to end on or be reckoned to a particular date, that day shall be deemed to be included in the Therefore, even if a receiver is not appointed until late on a Friday evening, that day will be included in the computation of the relevant three-day period, which will expire at midnight on Sunday. Financial institutions hoping that a petitioner seeking to appoint an examiner will not become aware of such an appointment in