There is a new sheriff in town and his name is Paul Appleby. Appleby has been appointed as director of corporate enforcement pursuant to the provisions of the Company Law Enforcement Act 2001. The role of the director is primarily supervisory and relates to liquidators and receivers. As a subsidiary role, the director is charged with encouraging compliance with the companies acts.

Appleby's appointment comes as the Irish economy is in the midst of a slowdown and insolvency activity is significantly on the increase. One indicator of the increase in insolvency work is the number of practitioners who, at the end of the last recession, cast off the mantle of insolvency lawyer and re-branded themselves under the guise of corporate finance lawyer, labour lawyer or litigator, many of whom are now busying themselves around town proclaiming they were never really away.

Examinerships, notwithstanding a major statutory overhaul with the passing of the Companies (Amendment) No 2 Act 1999, are on the rise. Not only is the increase seen in the field of restructuring, but liquidations and receiverships are also on the up. A true sign of the times is the receivership of the Marlborough Group, Ireland's largest recruitment agency.

The director's success in encouraging compliance with the companies acts can be seen from the number of voluntary liquidations (usually with little or no assets) that have been or are being completed in the period since Christmas last year. The reason for this is simple. The Companies Act 1990 provides that where a person was a director of the company which at the time it went into liquidation was insolvent, he shall be restricted for a period of five years from acting as a director of any other company unless he can satisfy the court that he should not be restricted. There are specific exemptions for companies with a minimum paid up share capital.

Prior to the legislation establishing the office of the director, the practice in court liquidations was to bring a restriction application as the court would insist on the same. However, in the case of a voluntary liquidation, where the court has no direct input, the bringing of such applications was a rarity.

Since the passing of the Company Law Enforcement Act 2001, in every liquidation the insolvency practitioner must report to the director on the liquidation of the company and the stewardship of the directors of the company. In these circumstances, the director has the ability to relieve the insolvency practitioner from the need to bring a restriction application, although it remains to be seen how often this will happen in practice.

Accordingly, in all voluntary liquidations, regardless of the funds available, it will be necessary to bring a restriction application which involves an application to the High Court and more often than not a full day's hearing. Given the cost of such applications and the number of cases where there are little or no assets, practitioners have in the recent past sought to take down from their shelves and dust off old cases of little value in order to try and complete the liquidations prior to the director's regime commencing.

The director of corporate enforcement has significant powers under the 2001 Act. In the first instance any liquidator or receiver appointed must notify the director of his appointment. Thereafter liquidators of insolvent companies are obliged to provide a report to the director within six months either of their appointment or of the Act coming into force, whichever is the later.

The director is entitled to require a receiver or liquidator to produce the books and records of the insolvency practitioner. If a disciplinary committee of a professional body finds that a member of that body has not maintained adequate records or has committed an indictable offence under the Companies Act during the conduct of the liquidation or receivership, then the Act requires that professional body to notify the director. It is the common belief that the purpose of these powers is to enable the director to prosecute errant receivers and liquidators.

The director also has powers of search and seizure whereby he may obtain an order entitling him to gain entry into and search premises together with the power to examine officers and other persons under oath in a liquidation. The director is also empowered to seek the arrest of an absconding officer of a company and effecting the seizure of that person's property.

The director has the power to apply for an award of damages against persons who the court finds liable for misappropriating company assets or other misfeasance.

Significantly, the director may also apply to the court for any of the reliefs available under the Companies Act which apply to companies that are not in liquidation as a result of there being insufficient assets to discharge the cost of the liquidation. In effect this means that any creditor or the director can seek to have the directors of a company which has not been liquidated, due to the insufficiency of its assets, made personally liable for fraudulent or reckless trading. The director can also seek to have assets which have been transferred out of the company with the effect of perpetrating a fraud on the creditors restored to the company relief, which would normally only be available where the company itself is in liquidation.

A further significant change brought about by the 2001 Act is the alteration of the voting procedure at creditors' meetings in creditors voluntary liquidations. Prior to the passing of the Act a liquidator nominated by the directors could only be replaced on a vote of the creditors present in person or by proxy where a majority in number and value of the votes were cast in favour of an alternative nominee.

The 2001 Act changes this procedure so that it is now a majority in value only. This change, when combined with the policy of the Revenue Commissioners adopted a number of years ago to attend and vote at all creditors' meetings allied to the regrettable practice of many companies in this jurisdiction whereby the Revenue Commissioners are used as a lender of last resort, has meant that the Revenue Commissioners' proxy at creditors' meetings has taken on a new and compelling significance.

The law on examinerships was radically overhauled in 1999 by specific legislation. The significant changes are as follows:

-The test for entry for court protection has now been raised from the petition disclosing "some" prospect of survival to the need to disclose a "realistic prospect" of survival.

-Specific provisions in relation to guarantees have been introduced whereby it is possible for a creditor, who has the benefit of a third party guarantee, through its failure to provide notice as required under the Act, to lose the benefit of that guarantee.

-The duration of an examinership has now been shortened from three months plus a possible one month extension to 70 days with a possible extension of a further 30 days.

-The petition for the appointment of an examiner must be accompanied by the report of an independent accountant and among the matters in which the independent accountant reports are a detailed statement of the company's cash requirement during the protection period together with the source of that funding.

The creation of the office of the director of corporate enforcement coupled with the economic downturn and the additional work likely to be created by the forthcoming European Insolvency Regulation suggest that there are busy times ahead for Irish insolvency lawyers.

Given the number of changes in both practice and procedure introduced by the statutes referred to above and the presence of the director of corporate enforcement it is time for the cowboys to get out of Dodge.

William Day is a partner in the insolvency group at Arthur Cox.