Examinership

What is the Examinership process?

Examinership is an Irish Companies Act procedure, which can be proposed by any company where it can establish COMI in ROI. It permits a company to compromise with its creditors and propose a viable scheme of arrangement to the Court.

The appointment of an examiner provides the applicant Company with an automatic moratorium from all its creditors, in respect of balances due and owing up to the date of the application.

The scheme must demonstrate that all creditors would achieve the same or a better return from such a process versus a liquidation of the Company and disposal of assets and must be commenced and implemented within 150 days of the application.

Any amounts falling due during the protection period, including borrowings or leasing obligations, must be met and an applicant would have to demonstrate they had adequate cashflow for the protection period to meet such costs.

The scheme is only required to be approved by one class of impaired creditors, subject to no creditor being unfairly prejudiced by the scheme and it is a process that can be applied for by Companies that are insolvent or likely to become insolvent.

Who should consider them?

• Companies struggling with large debts

• Companies needing to restructure

• Companies experiencing trading difficulties

• Companies under pressure from their creditors

• Companies wanting to avoid liquidation

What are the advantages of an Examinership?

• Avoids liquidation;

• Protection from creditors – a Receiver or Liquidator cannot be appointed;

• Large write downs of debt can be achieved;

• Leases can be re-negotiated/ disclaimed;

• Company continues trading;

• Directors stay in control of the company during examinership;

• Gives the company time to be restructured;

How can Deloitte help?

Deloitte act as Court appointed Examiners and work with Companies through all stages of the examinership process to ensure a successful outcome. The opportunity which examinership affords for Companies to restructure is invaluable and obtaining early advice prior to and guidance throughout the process is critical.

Additionally, Examinership facilitates cross border restructuring as it is a specified insolvency process under Regulation (EU) 2015/848 on insolvency proceedings and subject to limited exceptions, the appointment of an examiner and any proposals under a scheme of arrangement for the company which have been confirmed by the Irish Court are automatically recognised and binding through-out the EU, apart from Denmark.

Examinership is generally a recognised process in the United States under the US Chapter 15 recognition process and is a more cost effective process than Chapter 11.