Examinership

Examinership is a process in Irish law whereby the protection of the Court is obtained to assist the survival of a company. It allows a company to restructure with the approval of the High Court.

To obtain the appointment of an examiner it is necessary to petition the High Court and persuade the court that there is a reasonable prospect of survival of the company and the whole or part of its undertaking if an examiner is appointed.

The examiner has a fixed period of 70 days (extensible to 100 days) in which to prepare a scheme of arrangement, which must be approved by at least one class of creditors of the company. If it can be shown that the scheme provides for the survival of the company and the whole or part of its undertaking and that it is not unfairly prejudicial to any creditor(s) of the company the court has discretion to approve the scheme.

In most schemes of arrangement an investor will invest in the company and part of the money invested will be used to pay a dividend to each class of creditors.

The principal rationale underlying the concept of examinership is to allow a company that is experiencing financial difficulties a period of protection from creditor action during which a third party (the examiner) has an opportunity to examine the affairs of the company and, if there is a reasonable prospect of the survival of the company and all or part of its undertaking as a going concern, to formulate proposals for a scheme of arrangement to facilitate such a survival.

The law relating to examinerships has its origins in the Companies (Amendment) Act 1990 which was passed by the Oireachtas at a time when the Goodman Group of companies appeared to be in danger of going out of business . Subsequently, the Companies (Amendment) (No. 2) Act 1999 was passed to give legislative effect to the recommendations of the Company Law Review Group which had been set up in 1994 by the then Minister for Enterprise and Employment to review the law relating to examinerships. The 1999 Act became effective on 1 February 2000 and made very substantial and significant changes to the examinership regime .

Court procedures in relation to examinerships are set out in Order 75A of the Rules of the Superior Courts.

An examiner is appointed to a company on foot of a petition brought before the High Court. The petition must be supported by an affidavit sworn by or on behalf of the petitioner. It must also be accompanied by a report prepared by an independent accountant.

The petition can be brought by the company, its directors, its creditors, its shareholders or any combination of these.

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Wikipedia