The Court of Appeal has dismissed an appeal by Eteams (International) Ltd, in voluntary liquidation, over an agreement that transferred the company’s debts to Bank of Ireland. The court upheld the High Court’s conclusion that the agreement was a debt sale, not a charge requiring registration under the Companies Act 1963.
The dispute concerned a written agreement dated 5 July 2007. It provided for the Bank to purchase the company’s debts up to €200,000 during an initial 12-month period. The Bank advanced 60% of relevant sales invoices, with payments on those invoices directed to a nominated Bank account.
The company argued that provisions allowing the Bank recourse against it for certain unpaid debts, along with other terms, meant the arrangement was in substance security over its book debts. If registration as a charge had been required, the unregistered agreement would have been void against the liquidator. The Bank maintained that the agreement transferred ownership of the debts.
In 2017, the High Court found that the agreement effected a valid purchase and was not a registrable charge. It also ordered the liquidator to pay the Bank proceeds from debts collected by him or the company, and to provide information needed for collection. The Court of Appeal reviewed that decision and found no error in the High Court’s analysis.
Delivering judgment, Ms Justice Baker said the agreement had to be assessed as a whole. She concluded its terms showed that the Bank owned the debts, had the sole right to enforce and collect them, and retained ownership after termination until the relevant recourse price was paid. The possibility of recourse against the company did not, by itself, turn a debt sale into a charge. The court also rejected the company’s argument that repeal of the 1963 Act deprived the High Court of jurisdiction, relying on statutory saving and transitional provisions.
The Court of Appeal proposed that the appeal be dismissed. The judgment records the Bank’s claim that it was entitled to retain €82,339.50, said to represent debts already collected and lodged in the nominated account; the amount owed was not material to the appeal.