Four Courts, Dublin

An increasing number of petitions for Irish company examinership are failing due to the courts deciding that they do not have a reasonable chance of surviving the current economic crisis according to Michael Quinn, Head of Corporate Recovery & Insolvency at William Fry speaking at the Firm’s breakfast briefing on Corporate Restructuring and Insolvency.

“Whilst there has been a dramatic increase in the number of petitions for examinership, 106% from 2007 to 2008, not all petitions are being granted. It is widely reported that only 30% of companies entering examinership since the beginning of 2008 emerge successfully from the process. In the case of an application for examinership the courts are applying a very stringent examination of the accounts in order to ensure that the business has a ‘reasonable prospect of survival’,” he said.

Commenting further on the matter Michael Quinn stated: “The appointment of an examiner is a serious decision as it gives the company court protection for 70 – 100 days. It has far reaching effects and can have serious implications for creditors of the company. The court must be satisfied that the company has a reasonable chance of surviving and hence the creditors will have a chance to receive a meaningful dividend on what they are owed. The appointment of an examiner can provide a healthy breathing space for a company however it can only be a solution if the business is considered to have a real and viable future.”

Attendees at the Briefing also heard about a number of other options that are available to troubled companies. Barry Cahir, Corporate Recovery & Insolvency Partner in William Fry said that in most cases it is preferable to find an alternative solution to the appointment of an examiner if possible.