As of 2002, according to the European Commission's (EC) "Best Project on Restructuring, Bankruptcy and a Fresh Start: Final Report of the Expert Group," Ireland has fully adopted seven of the Principles and Guidelines for Effective Insolvency and Creditor Rights Systems developed by the World Bank. It has almost fully adopted 24 principles, and it has partially adopted ten principles. The underlying legislative framework for insolvency in Ireland is, primarily, the 1963 Companies Act with subsequent amendments, which, as stated in the U.S. Department of Commerce's "Doing Business Guide," are "consistently applied by the courts."

General Overview

Ireland's insolvency framework is historically based on three UK statutes: The Companies (Consolidation) Act (1908), The Companies Act (1913), and the Companies (Particulars as to Directors) Act (1917). From these pieces of legislation, Ireland drafted its first post-independence company law: the Companies Act of 1963, followed by the Companies Act of 1990. As of 2002, according to the European Commission's "Best Project on Restructuring, Bankruptcy and a Fresh start: Final Report of the Expert Group" of 2003, Ireland has fully adopted seven of the Principles and Guidelines for Effective Insolvency and Creditor Rights Systems developed by the World Bank. It has almost fully adopted 24 principles, and it has partially adopted ten principles. According to the U. S. Department of State's 2006 Country Commercial Guide on Ireland, the Companies Act of 1963, the main law governing insolvency in Ireland, "is applied consistently by the courts" (p. 52).

According to the Philippe & Partners, and Deloitte & Touche (PP&DT) report of 2002, enforcement issues relating to the Company Law inspired the government to appoint the Working Group on Company Law Compliance and Enforcement in 1998. The Working Group recommended the creation of a new office, Director of Corporate Enforcement who, with his or her staff, would take over the responsibilities of enforcement oversight. This was legislatively mandated by the passage of the Company Law Enforcement Act of 2001. The report further notes that the Company Law Review Group (CLRG) in 2002 published a study of the then-current Irish Company Law and its practice, in which a number of recommendations were suggested. First, the law could be broadly simplified, and its focus could be shifted from a predominant concern with public companies to more closely consider the needs of private firms. The group also suggested adding legislation to require licensing for insolvency practitioners. In 2007, the CLRG once again repeated its recommendation that Ireland institute the professional regulation of insolvency practitioners, be they receivers, administrators, or examiners. It was suggested that this would help reduce the time required to complete liquidations, in particular. The CLRG acknowledged the existence of the Irish Insolvency Group, which is a professional organization that represents insolvency practitioners, but it appears that the organization does not at present undertake a significant regulatory or enforcement role. The group revisited the issue, rejected in 1998 by the Working Group on Company Law Compliance and Enforcement, that Ireland join the majority of common-law jurisdictions in constituting a public-interest liquidation service funded by the state.

The 2002 European Commission's (EC) report noted that with the 1963 passage of the Companies Act, the legal identity of a company was recognized as distinct from the identities of its officers and members, such that, in the absence of fraud, the officers and members of a failing company were not legally responsible for the company's debt. The focus was on liquidating, rather than rescuing, a failing firm. The law recognizes two forms of liquidation. In its contribution on Ireland in the edited collection of studies titled "Bankruptcy and Insolvency," edited by S. J. Berwin in 2002, the firm A&J Goodbody reported that both compulsory and voluntary liquidations are distributed in a set hierarchy. First to receive compensation are fixed-charge holders, followed by a preferred set of creditors including employees and the Inland Revenue, with floating-charge holders and, finally, unsecured creditors, receiving payment last. According to the same report, the "examination process" is a way in which the more drastic measure of liquidation may be avoided, and the insolvent company may be saved.

The 2002 PP&DT report pointed out that amendments were made after 1999 to the Companies act upon the realization that, in its then-current form, insufficient consideration was being given to rescuing viable companies, and the interests of creditors were being inadequately protected. The PP&DT report also noted that the examinership procedure was of limited applicability, but that, since receivership was not an option for all troubled companies, and does not have as its main focus the rescue of a viable firm, the procedure still could be said to retain some utility.

The 2002 PP&DT report also discussed the ways in which troubled Irish companies may be handled by means of receivership. Receiverships may be entered into in two ways. The first happens when a company "owes money under a debenture which is secured by a charge over all or part of the company's assets" (p. 4). In cases of default, a receiver may be appointed by the holder of the debenture to assume control of the company's assets. Alternatively, the High Court may appoint the receiver. This action strips the company of its powers relating to all implicated assets, which may then be sold to offset the monies owed to the holder of the debenture. With regard to liquidations, the PP&DT report noted that the 2001 Company Law Enforcement Act considerably strengthened creditor-rights protections.

The World Bank's 2007 "Doing Business 2008" assessment of Ireland's performance in the area of closing a business provides a comparison between Ireland and member states of the Organization for Economic Cooperation and Development (OECD) on three aspects of closing a business: time, cost, and recovery. In Ireland, it takes 0.4 years, on average, to complete a business wind-up, whereas, in the broader OECD community, it takes an average of 1.3 years. The cost of closing a business in Ireland, stated as a percentage of the overall assets of the closing firm, is 9%, compared to the OECD average of 7.5%. Finally, the average recovery in Ireland, stated in terms of cents on the dollar, is 87.1, compared to an OECD average of 74.1.