Vol 11 (2014) - Issue 3

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‘Examinership-lite’ in Ireland: Changes to be Introduced by the Companies (Miscellaneous Provisions) Act 2013

Introduction
Ireland is in the process of consolidating the considerable volume of existing company law legislation into a single piece of legislation. The new Companies Bill was published on 21 December 2012. It condenses the current 17 Companies Acts and related company law provisions into a single comprehensive code of company legislation. Whilst many of the sections are merely a restatement of the current law, there are also several company law reforms. This is a sizeable piece of legislation and, despite being published in 2012, the Bill is still at committee stage and is not expected to be passed until late 2014 at the very earliest.
The recent Companies (Miscellaneous Provisions) Act, 2013 (the '2013 Act') was signed into law on 24 December 2013. The contents of the 2013 Act were originally contained in the Companies Bill 2012. However, instead of waiting for the enactment of the Companies Bill 2012 it was decided to proceed with certain provisions on a priority basis by way of separate legislation. The 2013 Act introduces a number of amendments to existing company law, the most significant of which alters the regime in respect of the role of the Circuit Court in the examinership process. These new measures are now colloquially referred to as 'examinership-lite', which it is hoped will result in a new SME-friendly examinership regime.

What is examinership?
Examinership is a legal rescue mechanism which was introduced by the Companies (Amendment) Act 1990 (the '1990 Act') for ailing but potentially viable companies. In an examinership, the company is given court protection from its creditors for a period of 70 days (with a possible extension of 30 days). The examiner, an independent officer who generally has extensive accounting and insolvency qualifications and experience, is appointed to examine the company’s affairs and, if possible, to formulate proposals for a compromise or scheme of arrangement with the creditors of the company. This scheme of arrangement usually involves some sort of new investment and a write-down of the company’s debts. The examiner will put the proposals before meetings of the members and creditors of the company and seek the confirmation of the proposals by the court.
While the company is in examinership, it may not be wound up, a receiver may not be appointed, creditors may not enforce their claims and proceedings cannot be issued or continued against it save with the leave of the court. It effectively gives a company a period of ‘breathing space’ from its creditors during which it can seek to restructure its finances.
Traditionally, examinership applications have been dealt with by the High Court in Ireland. The examinership process has long been criticised as being prohibitively expensive for small to medium sized companies, in that, even if a smaller company was an excellent candidate for examinership, it would be unlikely to be able to fund the process. While the High Court could, under the pre-existing regime, choose to remit the matter to the Circuit Court (where it was satisfied that the total liabilities of the company did not exceed EUR 317,500), there was no option for a company to apply directly to the Circuit Court for the appointment of an examiner.

Amendments introduced by the 2013 Act
The 2013 Act introduces (amongst other things) proposals to alter the current regime in respect of the role of the Circuit Court in the examinership process.