The Office of the Director of Corporate Enforcement (ODCE) says that the number of reports it received from company liquidators last year was down almost a quarter on 2019 levels.
In its annual report, the director of the office, Ian Drennan (pictured), said that this drop was due to a number of factors, including the underlying downward trend in insolvent liquidations in recent years, and the impact of public-health restrictions on liquidators’ ability to discharge their functions.
He warned, however, that State supports, introduced to help businesses deal with the effects of the pandemic, could be masking the true levels of corporate financial distress.
“If this is the case, as the longer-term effects of COVID permeate the economy and the various State financial supports taper off, it might reasonably be expected that the level of corporate insolvencies will increase, potentially substantially,” he added.
The ODCE, as a participant in the Company Law Review Group (CLRG), was involved in developing a number of amendments to company law that were aimed at helping companies to deal with some of the challenges posed by COVID-19 restrictions.
These include the proposed SCARP mechanism, which provides for a new dedicated rescue process for small companies, as an alternative to the costlier examinership process.
Mr Drennan said that the fall in liquidator reports in 2020 had the knock-on effect of reducing the number of company directors restricted and disqualified in 2020 by almost 40%.
A total of 61 directors were either disqualified or restricted for their behaviour as directors of insolvent companies during the year.
A further 18 were disqualified after ODCE investigations into companies that had been allowed by their directors to be struck off the Register of Companies for the failure to file statutory returns while having significant outstanding debts.
The office is currently involved in high-profile investigations into the Football Association of Ireland (FAI) and Independent News & Media (INM).
Inspectors delivered a second interim report on the INM probe to the High Court in April last year.
In the annual report, Mr Drennan said company law was always the “starting point” for his office.
He warned of “unrealistic expectations” about what the ODCE could do, referring to calls for his office to investigate several financial-services issues — and even the alleged inappropriate deployment of COVID-19 vaccines in hospitals.
“It is important to appreciate that company law is not, nor was it ever intended to be, a vehicle through which every conceivable alleged instance of so-called ‘white collar’ crime concerning a company, however tangentially, can be addressed,” he said.