IRELAND Law and Practice Contributed by: Keith Robinson, Barry Tyrrell and Julia Mullin, Dillon Eustace LLP
Where a bank has a reasonable prospect of survival, the Companies Act 2014 (as amended) allows the CBI to petition to appoint an examiner to an Irish bank. Examinership is a process that enables arrangements to be made with creditors of a company in difficulty to facilitate its survival. The EU has also developed a legislative frame - work in respect of the insolvency, recovery and resolution of EU banks. The CBI would most like - ly utilise the toolkit provided under the European Union (Bank Recovery and Resolution) Regula - tions 2015-2020 (the “BRRD Regulations”) where an Irish bank is in financial difficulty. The BRRD Regulations provide a framework for resolving failing banks and enables authorities to intervene early to prevent the failure of an institution. The BRRD Regulations: • provides that banks are required to prepare recovery plans that identify options that can be executed in the event of a signifi - cant financial deterioration of the institution, thereby reducing the likelihood of failure; • grants a set of early intervention powers to supervisors, including the requirement for institutions to execute recovery options, the removal of management and changing the structure of the institution; and • provides for resolution planning activity to be undertaken by the CBI or the European Central Bank’s Single Resolution Board (the “SRB”) in advance of failure to ensure that this process is managed effectively. Under the BRRD Regulations, the CBI is the national resolution authority for Ireland. For banks designated as significant under the Sin - gle Supervisory Mechanism, the SRM Regula - tion divides the recovery and resolution tasks for those banks between the SRB and the CBI as the Irish national resolution authority. The SRB
will exercise some of the powers that would otherwise be exercisable by the CBI under the BRRD Regulations if a significant Irish bank fails or begins to fail. It is a condition of using a resolution tool that there is no reasonable prospect that any alter - native private sector measures or supervisory action would prevent the failure of the institution within a reasonable timeframe, having regard to timing and other relevant circumstances. A High Court order, on the application of the CBI, is required to apply any of the resolution tools to a bank or otherwise where the CBI wishes to have a liquidator appointed to an institution. This will be necessary irrespective of whether an institution is directly overseen by the CBI or the SRB. The CBI must engage with the Minister for Finance in certain situations, including making the proposed resolution order. When resolution tools are put in place or resolu - tion powers exercised, the bank’s shareholders will bear first losses. Creditors generally bear losses after the shareholders in accordance with the priority of their respective claims under normal insolvency proceedings. Creditors of the same class are to be treated equally and the “no creditor worse off” principle means that no creditor should incur losses greater than it would have incurred had the bank been wound up under normal insolvency proceedings. Cov - ered deposits are also protected. Once a resolution order is made, four resolution tools are available. They are: • bail-in; • sale of business; • bridge institutions; and • asset separation.
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