Titan Europe 2007-1 (NHP) Limited - Irish Stock Exchange

The bankrupt’s estate is comprised of all the property owned by the bankrupt at the date of the bankruptcy,
subject to certain exemptions, plus any other property that the Insolvency Act deems to comprise part of it. A
trustee in bankruptcy may be appointed to the bankrupt’s estate. Otherwise, the official receiver acts as trustee.
The trustee’s duty is to get in, realise and distribute the estate in accordance with the Insolvency Act. The order
of distribution, and its effect on secured creditors, are similar to a corporate liquidation, as described above.
If bankruptcy proceedings are pending or an order has been made, the court may stay any action, execution
or other legal process against the debtor/bankrupt. This does not prevent a secured creditor from enforcing his
security provided that the official receiver may on notice inspect goods, in which case enforcement before the
official receiver has had a reasonable opportunity to inspect the goods requires the leave of the court.
A bankrupt is generally discharged one year after the making of the bankruptcy order. The bankrupt is
discharged from the bankruptcy debts, although the trustee will continue to perform his functions. Discharge
does not affect the right of a secured creditor to enforce security.
Trustees in bankruptcy are given extensive statutory powers to challenge and set aside certain transactions
made in prescribed periods prior to the bankruptcy; these are described in more detail below.
Individual Voluntary Arrangements. Under Part VIII of the Insolvency Act an individual debtor may make
a proposal to his creditors for a composition in satisfaction of his debts or a scheme of arrangement of his
affairs. This may take place under the protection of a moratorium granted by the court. The proposal will be
considered at a meeting of creditors, which may approve the proposal by resolution passed by a majority in
excess of three quarters by value.
Challenges to Antecedent Transactions on Insolvency. English law allows trustees in bankruptcy,
liquidators and administrators to apply to court for an order setting aside certain types of transactions entered
into by the debtor in respect of which they are appointed. The affected transaction can include sales and
purchases of assets, financings and grants of security. The general aim of these measures is to prevent debtors,
companies and their directors and shareholders from arranging the affairs of the company or debtor so as to
favour particular creditors or third parties to the prejudice of other creditors.
In particular, the following orders may be sought:
(a) Setting aside transactions at an undervalue. Such a challenge may be pursued where the debtor
receives either no consideration or consideration which in money’s worth is significantly less than that
provided by the debtor in respect of a transaction that occurred within a specified period ending with
the date on which the insolvency proceeding commenced. Except in the case of an individual bankrupt
entering into a transaction at an undervalue at a time less than two years before the presentation of the
bankruptcy petition on which the individual is adjudged bankrupt, the debtor must have been insolvent
at the time of the transaction or became insolvent as a result, although insolvency will be presumed if
the parties to the transaction were connected.
(b) Setting aside transactions which prefer one or more creditors of the debtor over others. Where a debtor
has at the relevant time done anything which puts one or more of its creditors in a better position on the
insolvent liquidation or bankruptcy of the debtor than it would have been had the act not been done, a
preference is deemed to have been given. The debtor must have been influenced by a desire to improve
the position of the relevant creditor in respect of such transaction and the transaction must have taken
place in the six months (or if the parties are connected, 2 years) prior to the commencement of the
insolvency proceeding. Again the transaction can be set aside only if the debtor was insolvent at the
time of the transaction or became insolvent as a consequence.
(c) Disclaiming certain onerous property. Any unprofitable contract or any other property of the debtor
which is unsaleable or not readily saleable or may give rise to a liability to pay money or perform any
other onerous act may be disclaimed by a liquidator or trustee, giving rise to a claim in damages only
against the company.
(d) Declaring certain floating charges invalid. A floating charge created within 12 months (or 2 years in
the case of connected parties) prior to the commencement of the relevant insolvency proceeding may
be declared invalid, except to the extent of any new consideration provided in respect of the charge.
Again the debtor must have been insolvent at the time of or became insolvent as a result of the
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