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knowledge 15 July 2022 |

Irish High Court Makes Orders Winding Up French and US Companies

BMR Slendertone SARL and Slendertone Distribution Inc are wholly owned subsidiaries of Bio Medical Research Limited, an Irish incorporated company involved in the manufacture of electronic muscle stimulation toning products in over 20 countries.  Following an unsuccessful examinership, on 2 June 2022 Orders were made winding up the Irish company and appointing a liquidator.

The French and US subsidiary companies distributed product sourced from the Irish company and have their registered offices in Paris and Delaware.  They both have employees, assets and creditors in their local jurisdictions and their operations are closely interlinked and reliant on the Irish parent company.

A winding up petition was presented seeking orders winding up the companies.  A provisional liquidator was appointed pending the hearing of the petition.  It was submitted that the Irish Court had jurisdiction to wind up the 2 non-Irish registered companies on the basis that

  1. both have their Centre of Main Interests in Ireland and that under the Recast Insolvency Regulation, the Court could wind up the companies in main proceedings;
  1. or alternatively, in relation to the US company, the Court has jurisdiction to wind up the company as an unregistered company under Section 1328 of the Companies Acts 2014 on the basis that there is a sufficient connection between the company and the State.

Ultimately, the Court was satisfied to make declarations that the COMI of both companies was located in Ireland and made Orders winding up the companies on this basis. The Court also observed that absent a finding that the COMI of the US company was in Ireland, it would have been satisfied to make an order under Section 1328 of the Companies Act 2014.   In determining that the COMI was here, the Court had regard to the following:

  • All decisions regarding the supply and purchase of products were made in Ireland;
  • The Companies were entirely dependent on the Irish Company for product supply, customer service, after sales service, finance and audit support;
  • The majority of the Companies’ boards were Irish resident, spending virtually all of their time here;
  • While the Companies’ accounts were audited remotely, all communication in relation to the audits was with the head office in Ireland and management accounts were prepared in Ireland;
  • All of the Companies’ activities relating to IT, Human Resources, and Treasury take place in Ireland;
  • Customers visiting the Companies’ websites were directed to personnel based in Ireland;
  • Contracts with key creditors were governed by Irish law.

This case adds to the significant bank of jurisprudence on winding up and restructuring of non-Irish incorporated companies in this jurisdiction and showcases the benefit of the Recast Insolvency Regulation in facilitating ready recognition of orders across all EU Member States.

Also contributed by Emma Aspil

This document has been prepared by McCann FitzGerald LLP for general guidance only and should not be regarded as a substitute for professional advice. Such advice should always be taken before acting on any of the matters discussed.