Plans were last week announced by Richard Bruton to provide an examinership lite process. Under the plan, firms will be able to apply directly to the Circuit Court to have an examiner appointed to their companies instead of the more expensive High Court process.
It is welcome news and should extend the examinership progress to a greater range of companies that before this would have had to enter the liquidation process simply because they would not have been able to afford an examinership application.
Before now examinership was an expensive process as applications are to the High Court with significant amounts of court involvement which inevitably leads to substantial legal costs. This was a road that few small businesses can afford to go down.
As mentioned this new initiative will allow small businesses to now also apply to the Circuit Court for protection comes and should help struggling small to medium-sized businesses across the country that are viable but for some reason had gotten into trouble. Companies wishing to avail of the new regime will have to satisfy two of three conditions:
1. The company’s balance sheet must not exceed €4.4m
2. Turnover at the company cannot exceed €8.8m
3. The company cannot have more than 50 employees.
It would seem, the Minister is using the eligibility threshold figures for audit exemption for small companies. Therefore Examinership Lite has the potential to offer many of the 160,000 or so private companies that can currently avail of audit exemption a mechanism to restructure without the costs previously involved in examinership.
“Small companies will be able to apply to the Circuit Court for examinership so it will be cheaper and easier for businesses to restructure their debts, meaning that more companies will be able to do so.
“This will mean that more businesses will survive their current difficulties, meaning crucially that more jobs will be saved and more jobs will be created in this hugely important part of the economy,” said Minister Bruton.