Court allows examiner appointment for insolvent companies despite secured creditor's Debt Settlement Agreement. The court prioritized the statutory purpose of the Companies Act 2014 over the creditor's specific agreement. The decision establishes that a Debt Settlement Agreement is a relevant factor but does not preclude examiner appointment if a reasonable prospect of survival exists. The court exercised its discretion to appoint examiners for all seven companies to facilitate a potential scheme of arrangement. This ruling clarifies the balance between creditor rights and the broader economic benefits of corporate rescue under Irish law.

THE COURT OF APPEAL

Neutral Citation Number: [2017] IECA 247

Finlay Geoghegan J.

Peart J.

Hogan J.

Appeal No. 2017 463

IN THE MATTER OF KH KITTY HALL HOLDINGS LIMITED

AND IN THE MATTER OF THE COMPANIES ACT 2014

IN THE MATTER OF ML MEYRICK LIMITED

AND IN THE MATTER OF THE COMPANIES ACT 2014

IN THE MATTER OF MT MONO TRADING LIMITED

AND IN THE MATTER OF THE COMPANIES ACT 2014

IN THE MATTER OF EDWARD LEISURE ASSETS UNLIMITED COMPANY

AND IN THE MATTER OF THE COMPANIES ACT 2014

IN THE MATTER OF NICHE HOTELS UNLIMITED COMPANY

AND IN THE MATTER OF THE COMPANIES ACT 2014

IN THE MATTER OF STYLE CITY LIMITED

AND IN THE MATTER OF THE COMPANIES ACT 2014

IN THE MATTER OF RADICAL PROPERTIES UNLIMITED COMPANY

AND IN THE MATTER OF THE COMPANIES ACT 2014

JUDGMENT delivered by Ms. Justice Finlay Geoghegan on the 4th day of October 2017

1. This judgment is given in the appeal and cross appeal from the order made by the High Court (O’Connor J.) on 15th September,

2017 refusing the appointment of an examiner to, and dismissing the petitions of, Edward Leisure Assets Unlimited Company (“ELAU”),

Niche Hotels Unlimited Company (“Niche”), Style City Limited (“Style”) and Radical Properties Unlimited Company (“Radical”) and

appointing an examiner to KH Kitty Hall Holdings Limited (“KHKH”), ML Meyrick Limited (“ML Meyrick”) and MT Mono Trading Limited

(“MT Mono”). The companies named in the title are collectively referred to as the “companies” or “petitioners”.

2. The respondent to the appeals and appellant in the cross appeal is Deutsche Bank AG (“the Bank”) to whom the companies are

collectively indebted in the order of € 684m. It is a secured creditor of most if not all of the companies. It was not the original lender

to the companies. It acquired the debt and connected securities and rights from NALM in September 2015. Since that date there

have been protracted dealings between the Bank and the companies and their ultimate owner Mr Barrett.

3. I am grateful to my colleague Hogan J who has set out in greater detail in his judgment the factual background to the presentation

of the petition, the proceedings before the High Court and the High Court judgment which I do not propose repeating. I am also

grateful for his fuller consideration of all the issues raised on the appeal and cross appeal to which I will simply refer to as “the

appeal”. I simply wish to address certain issues having regard to the factual position next referred.

4. The unusual factual feature of the position of the Bank is that, in addition to being a secured creditor which has appointed a

receiver to five of the companies (on 18th August 2017), it entered into a written agreement with all of the companies, and others,

on 22 December 2016 for the purpose as recited therein “of documenting the settlement arrangement which the Bank has agreed with

the Barrett Connection in respect of the liabilities of the Barrett Connection to the Bank . . .” (“the Debt Settlement Agreement”).

5. Central to the Bank’s opposition to the appointment of an examiner to the companies is the Debt Settlement Agreement. In the

High Court, and also before this Court, it submitted that the presentation of the petition is an abuse of process by reason of the Debt

Settlement Agreement. It also submitted on appeal, in the alternative, that if the Court concluded it had jurisdiction to appoint an

examiner that it should, in exercise of its discretion, refuse to make the appointment by reason of the Debt Settlement Agreement.

Abuse of process

6. In the High Court, the Bank submitted that the presentation of the petition was an abuse of process by the petitioners by reason

of the Debt Settlement Agreement and should be dismissed for that reason. The High Court judge at para. 42 of his ex tempore

judgment concluded that it had established an abuse of process. This finding notwithstanding, it is not clear that it formed the basis

of his dismissal of the petition in respect of the four companies; it is not referred to in the High Court judge’s conclusion of his reasons

for dismissal and of course he appointed an examiner to three remaining companies, all of which were also parties to the Debt

Settlement Agreement.

7. The court does have an inherent jurisdiction to dismiss a petition seeking appointment of an examiner under Part 10 of the

Companies Act 2014 (“the 2014 Act”) if its presentation is an abuse of process. The Supreme Court in Re Vantive Holdings [2010] 2 IR

118 held that the bringing of a second petition on foot of crucial and material evidence deliberately withheld from the Court in the

course of a first petition and the reliance on evidence that could have been produced at the first petition hearing constituted an

abuse of the process and prima facie was a bar to the second petition proceeding. As pointed out by Murray C.J. at para. 20 of that

judgment “abuse of process may take many forms according to the context or the nature of the proceedings…” However, at the core

of actions which constitute an abuse of process are ones which abuse the due process of the administration of justice. On the facts

in Vantive it was the behaviour during the first proceedings which made the presentation of the second petition an abuse of process.

8. Section 510(1) of the 2014 Act confers (subject to certain express exceptions which do not apply) a statutory entitlement on a

company to present a petition seeking the appointment of an examiner (and thereby obtain protection of the court). That statutory

entitlement must of course be exercised for the intended purpose. The commencement or pursuit of proceedings for an improper or

ulterior purpose may constitute an abuse of process: Sean Quinn Group Limited v. An Bord Pleanála [2001] 1 IR 505. The evidence

before the Court indicates that the companies are genuinely seeking to have an examiner appointed for the statutory purposes of Part

10 of the 2014 Act, namely the rescue of the currently insolvent companies and their survival and that of their undertakings as going

concerns. Hence, even if it were to be the position that the presentation of a petition for the appointment of an examiner under the

2014 Act is a breach of their contractual obligations to the Bank under the Debt Settlement Agreement (which I am not holding), it

does not appear to me that it should properly be regarded as an abuse of process. I agree for the reasons set out more fully by

Hogan J that the Debt Settlement Agreement does not as a matter of contract preclude the presentation of the petition herein by the

companies. Clause 4.2 only precludes proceedings against the Bank which the presentation of the petition seeking the appointment of

an examiner is not.

9. It is not contended that any of the seven companies had any ulterior purpose or motive in presenting the petition. The companies

are exercising a statutory right for the intended purpose of procuring their rescue from insolvency and there is no prior proceeding

which makes the presentation of the petition an abuse of the due administration of justice. It is contended that the motive of Mr

Barrett as ultimate shareholder and a director is to retain control of the companies. Even if that is so it is in the context of the

companies seeking the protection of the Court and the appointment of an examiner with a view to proposals for a scheme of

arrangement which, if confirmed, would enable the companies and the whole or a part of their undertakings survive as going concerns

i.e. the statutory purpose. Accordingly, I do not consider that the presentation of the petition in the factual context of the Debt

Settlement Agreement constitutes an abuse of process as that term is properly understood.

Court’s Statutory Jurisdiction

10. The first statutory jurisdictional issue for the court on the hearing of a petition presented pursuant to Part 10 of the Companies

Act 2014 (“The 2014 Act”) is whether the petitioner has satisfied the Court in relation to the matters set out in s. 509(1)(a),(b) and

(c) and that “there is a reasonable prospect of the survival of the company and the whole or any part of its undertaking as a going

concern” (s. 509(2)). No issue arises on the requirements of s. 509(1)(a),(b) and (c). Where as in this instance the petition is

presented by multiple companies, some of which are related companies of the other, and the Court also considers the application

pursuant to s. 517 in relation to one or more of the petitioners as a related company then the Court must be satisfied in accordance

with s. 517(3) that “there is a reasonable prospect of the survival of the related company, and the whole or part of its undertaking,

as a going concern”. In addition, the Court is to have regard pursuant to s. 517(2) as to whether the making of the order “would be

likely to facilitate the survival of the company, or of the related company, or both and the whole or any part of its or their

undertaking as a going concern”.

11. A company which is a related company and is only a holding company without any separate business may have an examiner

appointed to it under s. 517. As Denham J. said in Tivway Limited (in examinership) & Others [2010] 3 IR 49 in relation to the

equivalent section in the Companies (Amendment) Act 1990:

“I am satisfied that the court has jurisdiction to admit a holding company, a related company, to examinership, to enable

companies in a group obtain the protection of the court – if they comply with the Act of 1990. However, the position of a

holding company is dependent upon whether the court is satisfied that there is a reasonable prospect of survival of the

related companies as a going concern. Thus in this case the issue is whether the court is satisfied that under the

proposed schemes of arrangement that there is a reasonable prospect of the survival of Construction and/or Tivway as a

going concern. If there is, then Holdings may also proceed in examinership.”

12. The seven companies fall into three categories. There are three trading companies, MT Mono, Niche and Style, each of which

operate the Meyrick Hotel, G Hotel and Eye Cinema respectively. In respect of each of those I am satisfied for the reasons more fully

set out by Hogan J. that the petitioners have put before the Court objective evidence that there is a reasonable prospect of survival

of each of those companies and their undertaking in accordance with the requirement as set out by Murray C.J. in Re Vantive Holdings

(No. 1) [2009] IESC 68. In this respect I would draw attention to

(1) Appendix F of the independent accountant’s report which includes a 12 month trading projection in respect of each,

with a significantly positive EBITDAR (Earnings before interest, tax, depreciation, amortization and rent); and

(2) the reasons set out at para. 76 of the independent accountant’s first report; and

(3) the information produced in relation to investment interest and refinancing proposals procured by the companies in the

order of €71m albeit rejected by the Bank and the further investment interest demonstrated to the interim examiner since

his appointment including from third party investors.

13. I have had regard to the criticism by Mr Gallagher S.C. on behalf of the Bank in relation to the trading projections and in particular

the failure to include interest and rent in accordance with the current lease agreements. Each of the trading companies leases the

relevant premises from a related property owning company: ML Meyrick; ELAU; or Radical. The evidence before the Court indicates

that any scheme of arrangement to be successful is likely to include a consensual variation of the rents currently reserved in the

leases. In practice the rents payable in recent years by the trading companies to their related landlord had been significantly less

than that in the lease agreements.

14. In respect of the three property-owning companies, ML Meyrick, ELAU and Radical, I am also satisfied that there is objective

evidence that they each have, in turn, a reasonable prospect of survival as a going concern. Their position is dependent upon the

ability of the operating companies to pay rents at a reasonable level and a written down debt liability which is sustainable having

regard to the rents receivable under the leases.

15. The reasonable prospect of survival of KHKH, as a holding company whose only undertaking is its shares in the subsidiaries, is

dependent, again, upon the reasonable prospect of survival of the trading companies on a profitable basis, the write down of its debt

liability as part of a scheme of arrangement such that it can service any debt it retains from the profits of its subsidiary trading

companies. As pointed out by the independent accountant at para. 7.1 of his report, this will in part depend upon the structure of

any refinanced debt in a scheme of arrangement. There is no doubt that appointing an examiner to the property owning companies

and KHKH would facilitate the survival of the trading companies.

16. I have also considered the submission made by on behalf of the Bank by Mr Gallagher S.C., criticising the lack of detail in relation

to the level of investment required from a prospective investor that would enable a scheme of arrangement to be formed which would

meet the requirements of s. 541(4) of the 2014 Act and which would, in particular, not be unfairly prejudicial to the interests of the

Bank.

17. Ms O’Neill submitted, in my view correctly, that as was stated by Clarke J. in the High Court in Re McSweeney Dispensers Limited

[2011] IEHC 494, what the Court needs to be satisfied of is “that there is some realistic prospect of an investor being prepared to put

up enough money that could generate a scheme of arrangement which might arguably avoid any unfair prejudice”.

18. Whilst neither the independent accountant nor anyone else on the petitioner’s behalf put figures on the level of investment

required to avoid unfair prejudice to the Bank he does address the potential availability of investment funds to formulate a scheme of

arrangement if an examiner is appointed. I do not consider that on all the facts of this petition the independent accountant or anyone

else could have been expected to or should have placed figures on what is required. The correspondence between the Bank and the

companies in May/June, 2017 indicate a potential availability of refinance in the order of €71m in aggregate, which undoubtedly was

rejected by the Bank. The Debt Settlement Agreement provides for a minimum return to the Bank in the order of €16.7 m from the

Meyrick Hotel, but there is no evidence of an anticipated return from the other assets to be disposed of (which term includes

“refinance”). I am satisfied on all the evidence put before the Court on this petition that the test as put by Clarke J. in McSweeney

was met.

19. In reaching that conclusion I have also taken into account the fact that the Bank did not put before the Court any evidence in

relation to its anticipated total realisations from the secured properties or pursuant to the Debt Settlement Agreement nor any other

objective evidence which disputed the views expressed as to the availability of investment which would enable an examiner to

formulate a scheme of arrangement such that it would not unfairly prejudice any of the creditors of the companies, including the

Bank. In saying this I am not in any way seeking to take away the onus which rests on the petitioners in this connection. However,

an objecting secured creditor does sometimes offer independent expert evidence disputing the reasonable prospect of survival of the

company.

20. Finally, on this issue it is relevant that it was not contended that the existence of the Debt Settlement Agreement precluded the

Court being satisfied that the companies and the whole or a part of their undertakings had a reasonable prospect of survival as a

going concern.

Section 518 – Failure to disclose

21. I am in agreement for the reasons set out by Hogan J. that having regard to the matters put before the Court in the petition,

grounding affidavit and exhibits thereto and the manner in which the application was presented to Meenan J. on the ex parte hearing

that there was no failure to disclose or breach of the obligation of utmost good faith either on the facts put before the Court by the

petitioners or in the presentation by counsel on their behalf to the judge taking the ex parte application. Accordingly, I have

concluded that O’Connor J. was in error in determining that there had been a breach of these obligations such that pursuant to s. 518

of the 2014 Act he should dismiss the petition on behalf of the relevant four companies.

Discretion – s. 509(1)

22. The central question on this issue in the appeal is the impact of the Debt Settlement Agreement on the exercise by the Court of

its discretion under s. 509(1) of the 2014 Act. Where the Court is satisfied in relation to the matters in s. 509(1)(a),(b) and (c) and

that there is a reasonable prospect of the survival of the company and the whole or a part of its undertaking as a going concern,

then in accordance with s. 509(1) the Court “may… appoint an examiner to the company for the purpose of examining the state of

the company’s affairs and performing such functions in relation to the company as may be conferred by or under [Part 10]”. The

statutory power conferred on the Court is a discretionary power and, as stated by Fennelly J. in Re Gallium [2009] IESC 8 at para. 46

(in relation to the equivalent provision in the Companies (Amendment) Act 1990, it confers a “wide discretion” on the Court. Fennelly

J. also stated that “the Court should take account of all the circumstances”and then continued:

“47. The entire purpose of examinership is to make it possible to rescue companies in difficulty. The protection period is

there to facilitate examination of the prospects of rescue. However, that protection may prejudice the interests of some

creditors. The court will weigh the existence and degree of any such prejudice in the balance. It will have regard to the

report of the independent accountant.

48. The Court has to take account of all relevant interests. The independent accountant must consider whether

examinership would be “be more advantageous to the members as a whole and the creditors as a whole than a winding-

up of the company…” This does not limit the range of interests to be taken into account by the court under section 2.

The interests of employees cannot be excluded. In the case of an insolvent company, it is natural that the creditors will

have the greatest interest in the future, if any, of the company. The court will take a balanced approach, as suggested

by the reference to the creditors as a whole.”

23. On the facts of Gallium there was no opposition in the Supreme Court from anyone interested in the affairs of the company,

including secured creditors to the appointment of an examiner. The general approach as stated by Fennelly J. must be considered in

that context. Nevertheless it helpfully clearly identifies that what the Court is concerned with at the hearing to appoint an examiner is

balancing the prejudice to the interests of some creditors by the appointment of the examiner with the creation of the protection

period to facilitate the examination of the prospects of rescue for the benefit of the creditors in general and others including

employees. The examination will include the prospects for the preparation of a scheme of arrangement (which in many instances,

inevitably involves new finance) which will not be unfairly prejudicial, for presentation to creditors and members and, ultimately, for

confirmation by the Court. However the dicta of Fennelly J. indicate that at this stage in the process the Court, once it has been

satisfied of the reasonable prospect of survival threshold, is not concerned with the potential prejudice to a creditor by any such

scheme of arrangement. That will be a matter for a confirmation hearing under s.541 of the 2014 Act if the examinership survives to

that point in the process. It is only concerned with the potential prejudice to the creditor which the appointment of an examiner and

extension of the court protection may cause.

24. Mr Cush S.C. for the petitioners relied on the similar approach by Clarke J. in the High Court in McSweeney Dispensers Limited

[2011] IEHC 494 in which he distinguished between matters to be considered at the stage of the appointment hearing and at a

scheme confirmation hearing. In that case, AIB, a secured creditor, was objecting to the appointment of an examiner. One of its main

grounds for objecting was the prospect of a scheme of arrangement under which Mr Hof, a controlling shareholder, would achieve a

write down of debt and retain control of the companies without making a significant capital contribution.

25. Clarke J. referred to a well established principle in relation to the purpose of examinership namely that it “is not to absolve

shareholders from the consequences of a failed venture”. He emphasised that at appointment stage he was only concerned with

reasonable prospects for survival and on the evidence there was a real prospect of others interested in “at least investigating the

possibility of making an investment”. He concluded that the opposition of AIB which focussed on the prospect of Mr. Hof retaining

control and the terms on which it might be achieved “were not factors to which any great weight should be given at this stage . . .”.

It is clear, by implication, that Clarke J. considered these were factors which might carry weight at a confirmation hearing.

26. The second general purpose of the examinership legislation referred to by Clarke J. at para. 6.4 which is relevant to the exercise

of discretion to appoint an examiner (as well as in making a decision as to whether to confirm a scheme of arrangement) is that “part

of the purpose of the examinership legislation is to prevent the single, large and secured creditor being necessarily enabled to arrange

events in a way designed solely to suit its own interest. A debenture holder who has a charge over the entire assets of a company

cannot, under the examinership legislation, use that fact to trump, in all circumstances, the interests of other creditors or

stakeholders”. In this connection he referred to the comments of McCarthy J. in the Supreme Court in re Atlantic Magnetics Limited

(in receivership) [1993] 2 IR 561.

27. Applying the principles set out in Gallium and McSweeney, it appears to me that, where it is satisfied it has jurisdiction to appoint

under s. 509 (1), the Court must exercise the statutory discretion given it on all the relevant facts and circumstances from the

evidence before it and put in the balance any prejudice to the interest of creditors by the appointment of an examiner and period of

protection. It must consider and weigh that prejudice in the context of the statutory purpose of Part 10 of the 2014 Act and with

particular regard to the purpose of the appointment of an examiner and a period of protection, being to facilitate the examination, in

some detail, of the prospects of in substance rescuing the companies by the preparation and proposal of a scheme of arrangement

which is not unfairly prejudicial to any interested party and which may be confirmed by the Court. The preparation of that scheme

may of course also include achieving agreement of relevant parties to changes to financial liabilities going forward such as consensual

amendment to the rents reserved under the leases between certain of the petitioning companies.

28. It must be recalled that if a court is satisfied that it has jurisdiction under s.509(1) it must have concluded that the company and

the whole or a part of its undertaking has a reasonable prospect of survival as a going concern. The statutory purpose of Part 10 of

the 2014 Act at the hearing of the petition stage is to enable an examination of “the prospects of rescue” as explained by Fennelly J.

in Gallium by the appointment of an examiner and consequent continuation of protection by the court.

29. All the relevant facts on the hearing of this petition include the position of the Bank as a secured creditor with the additional

contractual benefits it claims pursuant to the Debt Settlement Agreement and the appointment by it of a receiver to seven of the

nine companies. Accordingly, I have concluded that the Court in exercising its discretion as to whether to appoint an examiner must

take into account the Debt Settlement Agreement. However it should do so in the context of, and as part of, the balancing exercise

referred to above.

30. Mr McCarthy S.C., in reply, on behalf of the petitioners submitted that the only prejudice relied upon on behalf of the Bank in

relation to the appointment of an examiner as such was the potential costs of the examinership. Further that this probably arises only

if the examinership fails as it is quite typical for new investors to make provision to discharge costs of examinership separate to funds

being invested and available for a scheme of arrangement.

31. This is a potential prejudice. In accordance with s. 554(2), unless the Court otherwise orders, the examiner is entitled to be

indemnified in respect of remuneration, costs and expenses and pursuant to s. 554(3) they must be paid in full prior to any other

claim, secured or unsecured. This, however, is a potential prejudice for most secured creditors on the appointment of an examiner,

but it is nevertheless something which must be taken into account.

32. It is important to note that no submission was made that the Bank would suffer prejudice to its interests under the Debt

Settlement Agreement specifically by the appointment of an examiner. That appears to be correct. The presentation of the petition

seeking the appointment of an examiner is a “Termination Event” under Clause 1.1, however a Termination Event does not

automatically bring to an end the Debt Settlement Agreement, rather it permits the Bank terminate the agreement by notice in writing

pursuant to Clause 8.1. The Bank has not done this. Accordingly, the Debt Settlement Agreement remains in place. The contractual

position of the parties under the Debt Settlement Agreement is the same after the appointment of an examiner as it was before. The

Bank is of course precluded from taking certain enforcement steps and the companies may not pay certain debts pursuant to ss.520

and 521 of the 2014 Act. However it is not contended and there is no evidence of any intended step required or permitted to be

taken under the Debt Settlement Agreement in the proximate period which if not done will result in particular prejudice to the Bank. I

recognise that any scheme of arrangement proposed by an examiner following new investment may impact on the position of the Bank

under the debt settlement agreement. However, that appears to be a matter for consideration when and if an examiner proposes a

scheme of arrangement. I am conscious that there are disputes between the parties in relation to alleged breaches of the debt

settlement agreement and I only intend these comments as identifying that the time at which prejudice to the Bank having regard to

the existence of the Debt Settlement Agreement may require to be considered is at the time when the Court comes to consider the

approval of a proposed scheme of arrangement. It is not a determination of the current status of the Debt Settlement Agreement it is

rather, simply, to state that there is no change in its contractual status by the appointment of an examiner.

33. I have also considered potential prejudice to the Bank both having regard to the Debt Settlement Agreement and the appointment

of receivers by delay in the event that the examinership fails. However, having regard to the time limits for the examinership; the

obligation on an examiner to come back to court immediately, if it appears to him that he is unable to formulate proposals for a

scheme of arrangement; the fact that under the terms of the Settlement Agreement the date by which the consensual disposal of

non-core assets was to be achieved is 31st October, 2017; and the absence of any specific prejudice such as loss of a negotiated

sale by a receiver, delay is not a matter to which particular weight should be given on the facts herein. As already stated, no specific

submission was made of prejudice by reason of delay by reason of the appointment of an examiner.

34. I have concluded that the position of employees is better protected by the appointment of an examiner with a reasonable

prospect of survival of their employer companies than if the Court refuses the appointment of an examiner and the receivers

appointed continue the trading of the Meyrick Hotel, the G Hotel and the Eye Cinema with a view to asset sales. This is particularly so

in the case of the employees of MT Mono to which no receiver is appointed. There will be a continuity of contracts of employment

with the same employer.

35. In relation to the general creditors I have noted the significant support for the appointment of an examiner but also the

undertakings from the Bank as to how it will treat trade creditors during a receivership in the event that the appointment of an

examiner is refused. If the examinership is successful the companies will survive and the general creditors would have the opportunity

of a continuation of trading with the same persons which would not happen in asset sales by a receiver. This benefit to general

creditors is part of the statutory purpose of examinership: to enable a company and its undertaking survive for the benefit of the

economy as a whole.

36. The final issue on discretion relates to the submission in reliance on the public policy to uphold settlement agreements. That is

part, as submitted by Mr Cush SC, of a wider public policy to uphold agreements. It is for this reason that I have carefully considered

the impact of the appointment of an examiner on its terms and the potential prejudice to the Bank of such an appointment as distinct

from any proposed scheme of arrangement. That appears to me to be what is required at this point in the statutory scheme of

examinership enacted by the Oireachtas in the 2014 Act.

37. I have concluded, balancing the potential prejudice to the Bank in relation to the costs of a failed examinership and some limited

delay in recovering amounts anticipated by the performance of the Debt Settlement Agreement with the statutory purpose of

examinership and the scheme of the 2014 Act on all the facts herein (including those relating to the employees and general creditors),

the Court should exercise its discretion in favour of appointing an examiner to all seven companies named in the title.

Conclusions

38. In summary, my conclusions on the issues in the appeal and cross appeal considered in this judgment for the reasons set out are:

1. The presentation of the petition by the companies who are parties to the Debt Settlement Agreement of 22 December

2016 was not an abuse of process.

2. The Court is satisfied, in accordance with the tests set out by Murray C.J. in Re Vantive Holdings (No. 1) [2009] IESC

68 and Clarke J. (as he then was) in the High court in Re McSweeney Dispensers Limited [2011] IEHC 494 that each of

the companies and all or part of its undertaking has a reasonable prospect of survival as a going concern. The trading

companies and property owning companies each have an undertaking. Insofar as KH Kitty Hall Holdings Limited is a holding

company only and is to be treated as a related company under s.517 of the 2014 Act, it has a reasonable prospect of

survival dependant on the survival of its subsidiaries and the making of the order would also facilitate the survival of its

subsidiaries.

3. The existence of the Debt Settlement Agreement between the Bank and the companies is a relevant matter to take

into consideration in exercising the Court’s discretion under s. 509(1) of the 2014 Act as to whether or not to appoint an

examiner.

4. The Court should on all the facts herein exercise its discretion under s.509(1) of the 2014 Act in favour of appointing

an examiner to all seven companies. This conclusion is reached having regard to the general statutory purpose of Part 10

of the 2014 Act and its scheme. Specifically, at the appointment stage the purpose of the legislation is to provide a

period of protection to enable the examiner conduct a detailed examination of the affairs of the companies and, if

feasible, formulate a proposal for a scheme or schemes of arrangement which will not be unfairly prejudicial to any

interested party and which, if confirmed, would ensure the survival of each of the companies and its undertaking as a

going concern for the benefit of the economy as a whole, including the general body of creditors and employees. This

conclusion is reached having considered and put into the balance the prejudice to the Bank from the appointment of an

examiner as distinct from any scheme of arrangement having regard to its position as a secured creditor which has

entered into the Debt Settlement Agreement with the companies (and others) in December 2016 and appointed a receiver

to five of the companies on 18 August 2017.

5. The appeal should be allowed and the cross appeal dismissed.