Portfolio

“Examinership Lite” – New Restructuring Options for SMEs

There are a number of possible restructuring options available for SMEs which have been outlined below.

  1. Examinership
  2. Introduction of VC or Angel investor capital
  3. Introduction of fresh investment to increase capital base
  4. Sourcing of additional or replacement working capital
  5. Debt for equity conversion for key creditors
  6. Dividend payments for trade and other creditors
  7. Restructuring of existing Bank Debt
  8. Bank debt reduction – via re banking / new investment
  9. Disposal of assets to reduce debt
  10. Disposal of parts of business to fund core business
  11. Merger with other businesses to achieve synergies

We take a more detailed look at the first option, examinership, and specifically examinership in relation to SMEs.

New Examinership legislation was recently introduced and is sometimes referred to as “Examinership Lite” as it aims to provide an SME-friendly Examinership regime. This regime operates with the assistance of the Circuit Court, as opposed to the High Court.

It enables a “small company” to elect to apply directly to the Circuit Court (rather than the High Court) for the appointment of an examiner and as a result will reduce legal and professional costs for the applicant.

Under the right conditions Examinership is a highly effective corporate restructuring tool, but in the past SME Companies generally couldn’t avail of the process, possibly because of the size of the High Court legal costs.

The new Examinership Act prescribes that the Circuit Court has jurisdiction where the applicant is a “small company”. Two or more of the following conditions must be satisfied in order to meet the definition of a “small company”:

  • The turnover does not exceed €8.8 million;
  • The balance sheet total does not exceed €4.4 million;
  • The average number of employees in the company does not exceed 50.

Advantages of Examinership

  • Company can continue trading
  • Significant write downs of debts achievable
  • Leases can be re-negotiated or disclaimed
  • Directors stay in control during the examinership
  • Allows the company time to be restructured
  • Avoids liquidation
  • Protection from creditors – a receiver or liquidator cannot be appointed

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For more information and advice contact Joe Cunnane at TRA Professional

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Joe Cunnane Practice Owner TRA Professional Services       Qualifications:  FCA Chartered Accountant & AITI Chartered Tax Advisor Joe has over 20 years experience working in both private practice and industry ... Read More »