Examinership

An Examinership arises where a Company obtains the protection of the Court to allow it to trade without the fear of the Bank seeking to wind it up or take other enforcement action against the Bank.

In order to be successful the Court has to consider a number of matters;

  1. If the Company has a reasonable prospect for survival.
  2. If the Company has investors who are ready to invest sufficient sums to enable it survive.
  3. Will the Company have sufficient working capital to cover the period of examinership and the costs involved in same.

Process.

The process usually involves an initial application where an Examiner is appointed on an interim basis. The Examiner then comes before the Court at a later stage with a proposed scheme of arrangement. This scheme of arrangement will usually involve the creditors accepting a percentage of the debt due to them. It is a matter then for the Court to decide where a scheme is realistic and one which should be approved.

There has been a very low percentage of companies in difficulty which have availed of the examinership process. The reason for this is because of the prohibitive costs of seeking examinership. As a result of recent legislation examinership applications can now be brought before the Circuit Court which will greatly reduce the cost of such applications. It is anticipated that during 2013 there will be a significant increase in examinership applications.

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