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As outlined in our blog post yesterday, today we are looking at Examinership and what it means for companies. For ease of reading we have set out some of the key points in bullet format.

What is Examinership?

In essence examinership is a court managed restructuring process for companies who are insolvent and this process is set out under Part 10 of the Companies Act 2014. In general companies tend to enter the examinership process to avoid liquidation, receiverships or more onerous contracts.

  • The Company is protected from creditors for 70 days and this can be extended to 100 days.
  • The Company’s debt is in effect “crammed down” into a scheme of arrangement and the Company exits the examinership totally solvent.
  • The Company must have a reasonable prospect of survival to be granted the protection of examinership. An independent experts report will be required.
  • A petition for examinership can be brought by the Company, its members or a creditor.
  • Once an examiner is appointed, no proceedings/resolution to wind up the company can be granted and a receiver can also not be appointed. There can be no enforcement against the Company or any guarantor.

Once appointed, what is the Examiner’s role and duties?

  • The examiner must examine the Company’s affairs, secure investment and prepare a scheme of arrangement with its creditors.
  • Each class of creditor must receive a dividend which is more than they would obtain if the Company went into liquidation.
  • The examiner must convene creditors meetings and ensure support of at least one impaired class of creditor. No class of creditor must be unfairly prejudiced.
  • The examiner must report to the Court and obtain Court approval for a scheme of arrangement.

What is a Scheme of Arrangement?

In essence a scheme of arrangement is where the Company debt is divided into creditors/members of the Company.

  • The Examiner divides each class of members and creditors of the Company e.g. revenue, employees etc. There must be equal treatment for each claim/interest of a particular class
  • The Examiner provides for implementation of proposals and prepares an up to date statement of assets and liabilities
  • The Examiner co-ordinates and liaises with potential investors to try and “save” the Company.

How is secured and unsecured debt treated?

In general the Examiner may dispose of assets subject to a fixed and/or floating charge with the leave of the Court.

  • Secured debt is usually restructured or refinanced at a suitable level
  • Unsecured debt is usually “crammed down” and unsecured creditors will receive a minimal percentage of their debt.

How are Examinership costs treated?

The Examiner must apply for Court approval of his costs and in effect he will be indemnified out of the revenue of the Company or from the proceeds of the realisation of the assets or investment monies.

  • When sanctioned by the Court, the examiner’s fees are afforded priority/
  • Certified expenses will be paid in full before any other claim but after any secured claim.

In our next blog post we will look at the area of Receivership and outline some key issues for Directors and Companies to consider.

As always if you have any queries on Examinership please do not hesitate to reach out and call our offices on +353 1 517900 or email us wendy@wdsolicitors.ie

Thanks for reading!