IRELAND Law and Practice Contributed by: Diarmuid Mawe, Craig Kenny, Katelin Toomey and William Fogarty, Maples Group
circumstances where that company is unable (or is likely to be unable) to pay its debts but where there is a reasonable prospect of the survival of the company. During the period that an exam - iner is enquiring into the affairs of a company, a moratorium prevents secured creditors from enforcing their security without the consent of the court. 3.7 Subordinating Existing Debt to Newly Created Debt As set out in 3.6 Formalities When a Borrower Is in Default , a real estate lender must register the charge/mortgage with the CRO in order to perfect security. Once the security is perfected, newly created debt cannot obtain priority over existing debt, other than by agreement. The priority of debt can also be structured through: Lenders may be reluctant to enforce security in circumstances where the borrower has environ - mental liabilities due to the application of the principle of strict liability under Irish environmen - tal legislation. There is a risk in these circum - stances that a lender may be liable under envi - ronmental laws for environmental contamination despite not having caused the contamination. 3.9 Effects of a Borrower Becoming Insolvent Under Irish law, both the creation of security and the making of payments by a company within six months prior to it being placed into insolvent liquidation are liable to be set aside as an unfair • contractual subordination; • structural subordination; or • intercreditor arrangements. 3.8 Lenders’ Liability Under Environmental Laws
preference if the company intended to prefer the creditor benefitting from the transaction over its other creditors. In the case of a connected per - son, the period is extended to two years and the transaction is deemed to give that person preference over other creditors, unless shown to the contrary, and to be an unfair preference and accordingly invalid. Where a company is being wound up, a float - ing charge on the undertaking or property of the company created within 12 months before the date of commencement of the winding-up (or two years if the floating charge is created in favour of a connected person) will be invalid, unless it is proved that the company was solvent immediately after the creation of the charge. This provision does not apply to: • money actually advanced or paid, or the actual price or value of goods or services sold or supplied, to the company at the time of or subsequent to the creation of, and in consid - eration for, the charge; or • interest on that amount at the appropriate rate. 3.10 Taxes on Loans There is no requirement for either lenders or bor - rowers to pay recording taxes in connection with mortgage loans or mezzanine loans related to real estate. 4. Planning and Zoning 4.1 Legislative and Governmental Controls Applicable to Strategic Planning and Zoning The Planning Acts apply to strategic planning and zoning, and regulate the zoning and permit - ted use of areas.
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