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NOTE ON THE CIVIL DEBT (PROCEDURES) BILL, 2015

The purpose of the Civil Debt (Procedures) Bill, 2015 (the “Bill”), is to effectively allow creditors recover debts where the debtor has capacity to pay the sums due, but refuses so to do.

The main features of the Bill allow creditors to apply to Court for an Order enabling either attachment of earnings or deductions from social welfare payments for the purpose of enforcement of the types of debts to which the legislation will apply.

An Order for Attachment of Earnings allows for the payment of debts by direct deduction from the debtor’s earnings. Attachment of earnings would arise where the Court orders the debtor’s employer to deduct specified sums from the debtor’s earnings to pay over to the creditor.

Deduction from social welfare payments would arise where the court orders the Department of Social Protection to deduct specified sums from the debtor’s social welfare payments to pay over to the creditor.

However, these provisions are subject to a number of safeguards for debtors and will have regard to the debtor’s capacity to repay the amount owed.

The Civil Law (Miscellaneous Provisions) Act, 2011  amended legislation to give the District Court the power to regard a failure by a parent/spouse/civil partner to comply with a court order as contempt of court and to deal with it accordingly, including by means of imprisonment.

Under the provisions of the Bill, such family law proceedings will now be the only situation in which a debtor can be imprisoned for not paying debts.

As of now, the law currently states that arrest and imprisonment are options available as an enforcement mechanism as a last resort, where a creditor has proved beyond reasonable doubt that a judgment debtor has failed to comply with an instalment order due to that debtor’s wilful refusal or culpable neglect.

The Bill abolishes the imprisonment of debtors in all circumstances other than family law proceedings as outlined above.

IMPORTANT FEATURES

• This Bill does not relate to debts for the repayment of loans by a bank, credit union, or other entity regulated by the Central Bank of Ireland; money lenders; or, credit cards. (Section 1)
• The Bill relates to Judgment Debtors. A Judgment Debtor is defined in the Bill as a person against whom judgment has been obtained. Therefore, a creditor wishing to rely on this legislation would need to have an order or decree for judgment against the debtor. (Section 1)
• A Creditor who has a judgment against a debtor can apply to the Court where the judgment is for a liquidated sum of not less than €500, but not more than €4,000, in circumstances where the judgment remains unsatisfied in whole or in part. (Section 5(1))
• Any application for an Order under this legislation would be made before the District Court in the District where the debtor resides. (Section 4)
• An employer of a judgment debtor is defined as a person who employs the debtor under a contract of employment or if the employer is an employment agency and the debtor has a contract with them; and is liable to pay the earnings of the debtor in respect of that work. Interestingly, this also includes a trustee of a pension scheme under which the judgment debtor is receiving periodical pension benefits. (Section 1)
• A Judge cannot make an order which both attaches earnings and makes deductions from social welfare payments at the same time in relation to the same debt.

 ATTACHMENT OF EARNINGS ORDER

• Section 9 of the Bill would empower the Court on application to make an order directing the employer of the debtor to deduct certain specified amounts at specified intervals from the debtor’s earnings and to pay the sums deducted directly to the creditor.
• The Bill also provides that before deciding whether to make or refuse an attachment of earnings order, the court must give the debtor an opportunity to make representations.
• The Bill goes on to provide that in specifying the amount of deductions the court must have regard to the “normal deduction rate”, which is the periodical amount which the earnings to which the order relates should be applied in satisfying the debt.
• The “protected earnings rate” is the rate below which the debtor’s earnings should not be reduced (having regard to the needs of the judgment debtor and his or her particular circumstances).
• If an employer affected by an attachment of earnings order ceases to be the debtor’s employer, the order lapses as far as that employer is concerned, except with regard to deductions from earnings paid by the employer after the cessation of employment, and payment to the creditor of such deductions from earnings made at any time by that employer.
• Where there is a change of circumstances, the debtor must notify the creditor within ten days.
• Where the debtor has a new employer, and the employer is made aware of the Order in force, the new employer must notify the creditor and the court.

• Where a debtor is in the service of the State, or local authorities etc., the Bill provides that for employees of the State or certain state bodies, specified persons are to be regarded, for the purposes of making an attachment of earnings order, as the relevant employer. Any question as to who should be the employer may be referred to the Minister for Public Expenditure and Reform for determination but the Minister is not obliged to respond unless the matter is referred to him or her by the court.

SOCIAL WELFARE DEDUCTIONS

• Section 15 of the Bill would empower the court on application to make an order directing the Minister for Social Protection, to deduct certain specified amounts from the debtor’s net social welfare and pay the deductions to the creditor.
• Before deciding whether to make or refuse a deduction from payments order, the court must give the judgment debtor an opportunity to make representations.
• Any social welfare deductions are deducted from the debtor’s social welfare after the following deductions are made:
  • Deductions for overpayments and repayments where an offence was committed;
  • Deductions for local authority rent;
  • Deductions for Local Property Tax;
  • Deductions required by an Order of Court (e.g. child maintenance).

(Section 1)

• A deduction from payments order will be sent by the court clerk to the Minister for Social Protection and the Minister will ensure that the deductions are made and paid to the creditor as soon as possible.

 OTHER PROVISIONS TO NOTE

• When a debtor receives notice of the creditor’s application to the Court, they will have a specified amount of time to complete and furnish a Statement of Means. The Statement of Means must specify, amongst other things, the debtor’s earning and expected earning, the name and address of every employer of the debtor, and information to allow employers identify the debtor. (Section 6)
• If a person in in receipt of social welfare and is a person to whom net scheme payments are payable, they will need to apply for a verifying certificate, which verifies the required information, however, this certificate will not be disclosed by the Court to a Creditor. (Section 6)
• If a debtor doesn’t provide the necessary information, the Court can order him so to do. (Section 6)
• Where the Court believes that the debtor can pay the debt concerned within a reasonable period, the Court can adjourn the creditor’s application for such a period on terms the Court deems reasonable.
• A debtor could apply to the court to amend an Order under the legislation where their earnings or social welfare payments decrease, or if there is another change of circumstances.
• At any time while an Order is in place, the debtor can pay the entirety of the amount owed, and the Order will cease to have effect.
• If the statement of means is false or misleading, the debtor can be fined by the Court.

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NEW COMPANIES LAW – WHAT YOU NEED TO KNOW
After 15 years of preparation, consultation and revision, a comprehensive new Companies Act was enacted on 23 December 2014. With nearly 1,500 sections and 17 Schedules, this is the largest piece of legislation ever enacted by the Oireachtas. It is expected that the bulk of the legislation has become effective on 1 June 2015.

This note sets out a summary of some of the key changes that may be of relevance to you. You will need to take specific advice on how the legislation affects you and your business.

Focus on the Private Company
Up to now, our company law was based on the needs of large public limited companies, but the great bulk of Irish business is done by small private companies. The new law focuses on the private limited company with shares and simplifies the law.

Company Law as you have known it, but made easier
The law in relation to companies remains substantially the same, but there are some significant changes. All directors, and all secretaries who are individuals, will have to be at least 18 years of age. Directors also have new obligations and exposures.

Transition Period and obligation to convert your company
There will be a transition period of 18 months, after the law comes into effect. During that time, all existing private companies with shares must choose to become either a company limited by shares (“CLS” or “LTD” type) or a Designated Activity Company (“DAC”), or another type of company ( e.g. a PLC). The form most likely to be chosen is a CLS type company. It may be useful to convert prior to the end of the transition period (as the more restrictive law on DAC’s apply to existing companies until they convert) and that option is available.

In the great majority of cases, unless the company has converted earlier to a CLS, the company will be deemed to be a CLS at the end of the transition period, and the directors will be required to prepare a new constitution in accordance with the new Act, to give it to the shareholders and to file it in the CRO.

Companies limited by shares
The CLS company type will have a number of advantages:-
• full capacity (the existing rule of ultra vires whereby companies cannot act outside of their objects will no longer apply);
• needs only one director and shareholder ( but it must also have a secretary if it has only one director);
• a simplified constitution;
• need not have an authorised share capital if so desired;
• no need to change the company name or stationery (it will continue to include “Limited” or “Ltd”).
Accordingly in many cases conversion to a CLS type may be the best option for you.
Designated Activity Companies
Some companies will have to, or may choose to, become a Designated Activity Company, where the company is or needs to be limited to carrying on a specific activity.

Simplified Procedures
The formalities associated with a great number of transactions will in many cases be easier: written majority resolutions, approval of some transactions (such as loans to directors or the company giving financial assistance for purchases of its own shares), and the ability for the CLS or LTD company type (as well as certain other companies, if they have a single member) to avoid having to hold an AGM and instead deal with the relevant business in writing. However, this is balanced with increased exposure for directors where the new approval procedures are used.

Directors’ duties codified
Judges have, over the years, decided what are the fiduciary and care duties of directors. These are now restated and codified in eight rules. These include the obligation to act in good faith in what the director considers to be the interests of the company and to act honestly and responsibly. The Act imposes an objective standard of care, skill and diligence on a director. There are also a number of rules dealing with the diversion of the company’s property, proprietary information or opportunities and conflicts of interest. Usefully, however, the Act allows the company to relax certain elements of these rules.
The constitution of a company will need to be properly drafted, if it is desired to take advantage of these options.

Directors’ Loans
We have become familiar with the restrictions on companies making loans, in favour of directors or connected persons. There is a new simplified procedure for approving or whitewashing such loans.
However, it is important that properly drafted loan agreements are put in place, because, under the new rules, undocumented loans between a company and a director/connected person, or loans which contain ambiguous terms, are to be treated adversely.

Directors’ Report
Each director will be required to confirm in the directors’ report that all relevant audit information of which they are aware (having made reasonable enquiries) has been conveyed to the auditors. This is a significant additional responsibility and it will be an offence to knowingly or recklessly make a false statement. Directors will need to take advice on what steps they need to take to ensure they comply.
Compliance Statements and Audit Committees
The directors of a company with a balance sheet total of €12.5m and turnover of €25m will have new obligations for securing the company’s compliance with (1) certain company law provisions imposing serious penalties (being category 1 and 2 offences) for non- compliance and (2) tax law. These include the directors drawing up a compliance policy statement and reporting on what has been done to secure compliance. For even larger companies (balance sheet total €25m, turnover €50m), the directors must consider the establishment of an audit committee and address the issue in their directors’ report.If you think any of this applies to you, please talk to us about what needs to be done.
Secretary
The Directors have a duty to ensure that the person appointed as secretary has the skills necessary to maintain (or procure the maintenance of) non accounting records which have to be kept under the Act and to ensure that the secretary has the skills or resources necessary to discharge the statutory and legal duties to which the secretary is subject and such other duties as may be delegated.
Mergers and Divisions
There are new arrangements which will make it easier to merge companies or to split the business of an Irish company. This may be a useful device in dealing with family succession or in the disposal of part of the business conducted by a company.

Insolvency
There are some changes in insolvency law, for the first time liquidators must have an appropriate qualification. It is also possible for an Examination to be conducted in the Circuit Court for companies that fall within the audit exemption criteria (this change is already in place).
What you should do
• Decide whether or not you are happy to convert to a CLS or a DAC, and remember some companies may be obliged to convert to DACs- we can advise further if required.
• With your advisers, review your Memorandum and Articles of Association and consider how the standard constitution should be adjusted to suit your requirements.
• Consider whether the secretary has the necessary skills or resources to allow the Directors to fulfil their duties when appointing a secretary.
• Put proper agreements in place to document directors’ loans to or from the company.
• Put in place a system to show that directors have made proper enquiries to identify relevant audit information and to disclose that information to the auditors.
• Check your agreements to see if changing the company’s constitution will require the consent of other parties.
• Check if there has been any breach of the obligations under Section 53 of the 1990 Companies Act to disclose interests in shares as the Act usefully provides a transitional period of 18 months to remedy an inadvertent default
• Consider whether you are up to speed on your duties as a director or owner of a company and contact us if you need an update.
We are happy to discuss how the new legislation will affect your business.

Congratulation to Kim Wilkinson on successfully completing the 10k in less than 1 hour. Keeping fit and all for two very worthy causes both at home and abroad.

There has been significant development in the collection of civil debts as the Government recently approved the drafting of the Civil Debt (Procedures) Bill,

The proposals will implement a number of recommendations of the Law Reform Commission (LRC) in relation to the enforcement of debt. The Law Reform Commission Report published in 2010 on Personal Debt Management and Debt Enforcement made a number of recommendations for wide scale reform of the existing personal insolvency and debt enforcement regimes. Key elements of that Report were implemented through enactment of the Personal Insolvency Act 2012. The new Bill seeks to implement further recommendations of the Report aimed at enforcement and recovery of debts which could be developed to streamline the existing enforcement procedures.

Under the proposed Civil Debt (Procedures) Bill, creditors may apply to the Court for an order enabling either attachment of earnings or deductions from social welfare payments, as appropriate, for the purpose of enforcement of debt. These provisions would be subject to a number of safeguards. The Bill will also make provision to provide for the abolition of imprisonment of debtors except in the case of maintenance arising from family law proceedings.

We have the below legal executive opportunity located at our Dublin offices.

I would be grateful if you would advertise same to your graduates.

Job Title: Legal Executive
Reports to: Legal Executive Manager
Hours of Work: Monday to Friday 9am to 5pm
Place of Work: Central Dublin
Salary: Commensurate with Experience with excellent package for the right person

The successful candidate will:
• Have experience in Litigation and in particular Debt Recovery, in the District and Circuit Court. Specifically issuing Claim Notices, Civil Bills, Applying for Judgment and Enforcing Judgments. Full training will be provided.
• Be highly motivated, capable of working on his/her own initiative as well as working as part of a team.
• He/she will also have excellent communication, computer, and organisational skills, with excellent attention to detail
Skills and Competencies Required:
• Great Administrative skills.
• Ability to deal with queries and post.
• Strong communicator by telephone and in writing.
• Ability to be in a client facing role.
• Strong negotiation skills.
• Be proficient in Microsoft Word and Excel and Microsoft Outlook.
• Be target driven and have a track record of reaching targets
• Previous Supervisory Experience would be desirable but not essential as there is scope for progression within the Department.

Email your CV to info@wardlawyers.eu

This year the staff at the Ward Group have raised a whopping €837.52 which Hugh Ward generously agreed to match.

On the 7th November 204 we presented a cheque to the Representatives of the Fr Peter McVerry Trust in the sum of  €1,675.04.

The fundraising organising committee includes  Kim Wilkinson. Marzena Markowicz, Kate Rudnicka, Sive Nolan. The committee organised a Bake Sale, Guess the baby competition along with a series of raffles and competitions.

We would like to congratulate the committee for a fantastic series of events.