Examinership is a corporate rescue procedure that allows a company to write off or defer debts and to repudiate leases and other contracts. A company that is insolvent but which has a potentially viable business may apply to the High Court for the appointment of an examiner.
Before applying for the appointment of an examiner an independent accountants report must be prepared by a person qualified for appointment as the company’s auditor. The independent accountant must express the opinion that the company has a reasonable prospect of survival and set out the basis for that opinion. If the Court appoints an examiner then the company enters a period of 70 days during which it is protected from action by its creditors. The period of 70 days may be extended to 100 days by the Court.
During the period of protection period the examiner should consult with the creditors and formulate a scheme of arrangement by which the company might survive. The scheme might involve the company’s debts being written down or deferred, leases being terminated or varied, and any other provisions that might be necessary for the company’s survival. The examiner must also identify the different classes of creditors (eg. preferential creditors, unsecured trade creditors, etc.) and summon meetings of each of the classes.
If a majority of those represented at one or more of the class meetings approves the scheme then an application can be made to the Court to make the scheme binding on all of the company’s creditors. The Court will generally approve the scheme unless it is opposed by a creditor who would receive a better outcome in a liquidation scenario than if the scheme were to operate.
If the scheme is not approved by the Court then the Court will order that the company be wound-up.The cost and complexity of examinership makes it unsuitable for most small and medium sized companies.
For information about examinership or to discuss how we can help you please contact Declan de Lacy at email@example.com or by telephone at 01 531 1111.