Obviously, it is better to reach arrangements with creditors before sheriffs are instructed so as to avoid the “poundage” costs of the sheriff.
Before the Sheriff makes a visit, it is normal for him to contact the debtor by letter requesting his proposals for payment. The receipt of such a letter is a significant event for the directors of a company, as it is evidence that the company is unable to pay its debts as they fall due. The directors need to consider very carefully if they should continue to trade, as it is possible that they be held personally liable for any new debts incurred by the company.
At this stage the directors, and its business advisors, should consider whether the company is insolvent, and if so should cease trading to avoid the directors being made personally liable for reckless trading. If the company is insolvent and has no prospect of its fortunes reviving then the directors should take immediate steps to place the company into liquidation. A copy of the notice to creditors convening the creditors meeting pursuant to section 587 of the 2014 Companies Act should be sent at the earliest opportunity to the Sheriff. Provided the Sheriff receives this notification within the appropriate time frame then the creditor, pursuant to the Act, is not entitled to retain the benefit of any execution. The purpose of the Act is to prevent any one creditor being preferred over another. Another alternative open to the debtor is to invite the bank to appoint a Receiver if the bank has the appropriate debenture.
If the directors considers that the business is viable, but is just suffering from short term cash flow difficulties, then they should open up dialogue with the Sheriff and present positive proposals for settling the debt. If no such proposals are forthcoming, then the Sheriff will visit the premises to seize whatever assets he can.
The Revenue sheriffs are “private sector” self employed individuals. As a result, they can be very pragmatic: It does not pay them to become involved in complex seizures of assets. The sheriffs have been given authority by the Revenue to negotiate instalment plans of up to 2 years.
We set below Section 607 of the Companies Act 2014 which sets out some of the duties of a sheriff when he has seized goods from a company.
|(1) Subject to subsections (2) to (4), where a creditor has—|
|(a) issued execution against the goods or lands of a company, or|
|(b) attached any debt due to the company,|
|and the company is subsequently wound up, the creditor shall not be entitled to retain the benefit of the execution or attachment against the liquidator in the winding up of the company unless the creditor has completed the execution or attachment before the commencement of the winding up.|
|(2) In a case where a creditor has had notice of a meeting having been called at which a resolution for voluntary winding up of the company concerned is to be proposed, then, for the purposes of subsection (1), the date on which the creditor so had notice shall be substituted for the date of the commencement of the winding up.|
|(3) A person who purchases in good faith, under a sale by a sheriff, any goods of a company on which an execution has been levied shall, in all cases, acquire a good title to them against the liquidator.|
|(4) Notwithstanding subsection (1), the rights conferred by that subsection on the liquidator may be set aside by the court in favour of the creditor to such extent and subject to such terms as the court thinks fit.|
|(5) For the purposes of this section—|
|(a) an execution against goods shall be deemed to be completed by seizure and sale,|
|(b) an attachment of a debt shall be deemed to be completed by receipt of the debt,|
|(c) an execution against land shall be deemed to be completed by seizure, and|
|(d) an execution in the case of an equitable interest shall be deemed to be completed by the appointment of a receiver.|
|(6) Nothing in this section shall give any validity to any payment constituting an unfair preference.|
|(7) In this section—|
|“goods” includes all chattels personal;|
|“sheriff” includes any officer charged with the execution of a writ or other process.|
If the debtor considers that his business is viable, but is just suffering from short term cash flow difficulties, then the debtor should open up dialogue with the Sheriff and present positive proposals for settling the debt. If no such possible proposals are forthcoming, then the Sheriff will visit the premises to seize whatever assets he can. As with any dispute, it is better to keep open the lines of communication. At a minimum, the debtor should negotiate a schedule of deferred payments.
We are experts in dealing with the Sheriff and explaining what options are available. The options for Companies include Turnaround & Restructuring, Schemes of Arrangement, Examinerships, Members Voluntary Liquidation and Creditors Voluntary Liquidation. For private individuals the options available are shown on our Personal Insolvency page,
For further information please contact Jim Stafford, Tom Murray or Andrew Hendrick on 01 661 4066 or