Bank of Baroda v Maniar & Anor

Failure to comply with the notice procedure in section 549 of the Companies Act 2014 prevents enforcement of a guarantee in the English courts where the procedure forms part of the applicable Irish insolvency law under the European Insolvency Regulation. Actual service requires receipt of the notice, delivery to an address accessible to the recipient, or awareness of the attempted service and its general nature.

An English court may determine how an Irish court would exercise its discretion to deem service good. The party seeking that result bears the burden of persuasion. The discretion requires consideration of all the circumstances, including the creditor’s efforts, any evasion of service and likely prejudice. Irish debt settlement arrangements may discharge guarantee liabilities where that is their substantive effect under Irish law.

The claimant bank sought payment from the defendants under guarantees and indemnities securing the liabilities of an Irish company, ACCHL. During ACCHL’s examinership, the bank attempted to serve notices under section 549 of the Companies Act 2014, but the defendants did not receive the notices within the statutory period.

The defendants subsequently entered debt settlement arrangements under Irish law. The parties disputed the effect of section 549, whether service had occurred or could be deemed effective, whether the English court could apply the Irish deeming power, the effect of the debt settlement arrangements, and the alleged quantum-reducing offset agreement.

1. Section 549. The statutory consequence of failing to make the required offer is that the creditor may not enforce the third party’s obligation by legal proceedings or otherwise. The provision did not discharge the liability, but it made enforcement of the guarantees in England impermissible. The section was sufficiently connected with the conduct of the examinership because the offer could enable a guarantor to exercise the creditor’s voting rights.
2. Actual service. Without reliance on a deeming provision, Irish law required proof that the recipient had received the notice, that it had been delivered electronically or physically to an accessible address, or that the recipient knew of the attempted service and the general nature of the document. The bank failed to prove that either defendant had such knowledge within the relevant period.
3. Deemed service. The English court could determine how an Irish court would exercise the power to deem service good. Applying the whole of the relevant foreign law required consideration of that discretion. The discretion involved a broad assessment of all the circumstances. Relevant considerations included the bank’s attempts to serve, the failure to take further readily available steps, whether the defendants had evaded service, and whether proper service would have made a meaningful difference.
4. The bank failed to persuade the court that service should be deemed good. The notices were sent by a method unlikely to achieve timely service, the bank knew that the email had failed, and it did not attempt personal delivery. The evidence did not establish evasion by either defendant. The claim therefore failed.
5. Debt settlement arrangements. Alternatively, the agreed Irish-law evidence established that the debt settlement arrangements discharged the defendants’ liabilities under the guarantees. The bank had not submitted to that process merely by receiving a distribution or referring to it in its summary-judgment application. The substantive effect of the arrangements was nevertheless governed by Irish law under the European Insolvency Regulation.
6. The alleged offset agreement was not proved. The claim against both defendants failed. The parties were invited to agree the final order.