Examinership has existed in Irish company law since 1990 yet it was not until the financial crisis of the late 2000's that it began to take on a life of its own. While that crisis has nw eased, the number of applications for court protection remains steady. The most recent report of the Companies Registration Office (CRO) shows that there were 29 applications for examinership in 2016, an increase from the previous year when there were 25 such applications. One reason for this is that the application, which previously had to be made to the High Court in all circumstances, may now be made in the Circuit Court, reducing both the time and expense involved in making it.
From a legal point of view, eaminership is an intense process from start to finish. The application for the appointment of an examiner must normally be made in quick time, in order to prevent creditors enforcing their debts and security against the company. Wheree an examiner is appointed, he/she must work in close conjunction with lawyers to stave off challenges from creditors while devising a scheme of arrangement which is fair as between all parties while ensuring the company's survival as a going concern. All of this - including the preparation of numerous reports and court applications - must be carried out within a strict time period of 100 days. After that, it is necessary to convince the creditors - and the court - that the survival plan is the best way to proceed and should be implemented.
Despite the steady number of examinership applications, they are rare when compaed to receiverships and liquidations. Therefore, there is much about them which remains unknown and there remains plenty of scope for legal uncertainty. Our role is to advise and represent the company when appointing an examiner and the examiner himself following appointment.
The first question lawyers will be asked is "Can I appoint an examiner to y company?" Since such applications are known to be expensive, it is imperative that this question is answered correctly. We can let you know within a short time (since time is often of the essence in these cases) if your case meets the test for the appointment of an examiner.
Once an examiner is appointed, numerous legal questions will need to be answered by him/her throughout the process. We specialise in providing legal advice to examiners of all kinds of Irish companies. The following are just a few of the questions on which we have been asked to advise examiners in recent years:
The following are a handful of examples of situations where we have advised corpoate creditors:
Disputes involving the claims of certain preferential creditors.
- Whether an examiner had breached his duties under the Companies Act 2014.
- Whether an examiner requires permission from the court to carry out certain powers.
- The examiner's proposed remuneration.
- Whether a scheme of arrangement was fair as between the various classes of creditors.
- Whether an examiner was right to certify various expenses as being expenses necessarily incurred in the examinership.
- Advising an examiner on issues of confidentiality when selling property by tender.
Most of the representative work we carry out for examiners involves making court applications on his/her behalf or, very occasionally, defending his position against creditors who feel they have been treated unfairly. It is common that a single examinership will give rise to numerous applications to the court, and most of these must be prepared within a short time frame. This is, therefore, a highly specialised and highly pressurised area of law, not least because the survival of a company and the jobs of its employees may depend on the outcome.
The following are some of the applications in which we have represented examiners or the company, as the case may be:
Ex parte application for the appointment of an interim examiner, followed by the full inter partes application.
- Application for directions in respect of pre-existing proceedings against the company.
- Application for directions regarding the performance of the Examiner's functions.
- Authorisation for examiner to discharge pre-petition debts.
- Application to transfer powers of directors to the Examiner.
- Leave to deliver Examiner's report to the Court.
- Sanction for the payment of the Examiner's remuneration and expenses.
- Application for extension of protection period.