Examinership

What is an Examinership?

An Examinership is a process whereby the protection of the Court is obtained to assist the survival of a company. It allows a company to restructure and it is an alternative to winding up the company in financial difficulties.

The Examinership process was provided for in the Companies Act 1990 and can be a very effective tool in restructuring a struggling companies finances regardless of the reasons behind the financial difficulty.

Easier process Introduced

In 2012, Minister for Jobs, Enterprise and Innovation announced important changes to the Examinership process which should result in the process becoming substantially more accessible to small and medium enterprises.

These changes will affect small private companies, meaning companies that satisfy two out of the three following conditions will no longer have to apply to the High Court to avail of the protection of examinership:

• Balance sheet not exceeding €4.4million

• Turnover not exceeding €8.8million

• Number of employees not exceeding 50

In December 2013, these amendments were signed into law bringing about the advent of “examination light” as it has become known. As a result a distressed company will be able to apply directly to the Circuit Court for protection and thereafter the Circuit Court monitors the process as opposed to the High Court. The criteria for a successful Examinership and approval thereof remain the same.

What criteria are necessary for a successful Examinership?

  • Does the company have a reasonable prospect of survival?
  • Does the company have investors ready to proceed with an immediate injection capital?
  • Will the company have sufficient working capital to cover the period of Examinership?
  • Are there sufficient assets in the company to cover the costs involved with an Examinership?

How is an Examinership approved?

  • The Creditors of the company must agree to accept a Scheme of Arrangement which is usually to accept a percentage of the debt.
  • If the Creditors of the company agree to accept the Scheme of Arrangement, the High Court must then approve the Scheme of Arrangement.
  • The Creditors of the company must agree to accept a Scheme of Arrangement which is usually to accept a percentage of the debt.
  • If the Creditors of the company agree to accept the Scheme of Arrangement, the High Court must then approve the Scheme of Arrangement.

Costs and the Control of Cost

We have the experience, connections, expertise and systems available to keep costs to an absolute minimum and allow even moderately capitalised / financed companies an opportunity to use the examination process.

There are schemes of arrangement which can be either Informal or Formal in the context of Court Approved which can achieve significant debt reduction without the formality of an Examinership. Achieving a turnaround in your business is the objective.

If your company finds itself in the position where you think it would benefit from at least considering the option of Examinership please contact David Walsh or Tom O’Connor