Examinership - An Opportunity for Reform

The COVID-19 crisis is presenting immediate challenges for Irish businesses. The legislature has already introduced emergency laws with an obvious focus on public health measures but a pivot towards legislation and further supports to mitigate the impact of the crisis on businesses is expected.

The examinership process will be a main feature of the business and legal landscape for the remainder of 2020. Examinership is a corporate rescue and restructuring procedure available under Irish law which provides an insolvent company with Court protection from its creditors for a limited time. The time is used by a Court-appointed examiner to negotiate with creditors and to seek new investment.

The process is an effective corporate restructuring tool. However, it can be expensive and certain aspects of examinership may not be suitable for the unique circumstances now being faced by businesses. There is an opportunity to amend the examinership legislation with a view to addressing these issues. A summary of possible amendments and other measures that may be adopted are set out below.

Period of Protection

Examinership provides a company with a protection period from their creditors for 70 days (which can be extended to 100 days following Court approval). The initial period of 70 days is generally considered an unrealistic time frame to allow an examiner to negotiate with creditors and to secure new investment. An application to extend the period of protection from 70 to 100 days is made in most examinerships where there is a realistic prospect of investment. An application to Court is required to get the extension and in order to reduce costs consideration could be given to providing for 100 days of protection from the outset.

Given the exceptional challenges now being faced, a case can also be made to provide for a longer period of protection. A period of protection of 120 – 150 days for example could be allowed for all companies or it could be reserved for companies meeting certain criteria in terms of their complexity or their creditor profile. A longer protection period would allow for a more orderly investment process and will afford protection beyond the expected duration of the Covid-19 crisis.

Concerns which creditors may have in relation to the proposed extension of any time periods should be tempered by the provisions of Section 535 of the Companies Act 2014 which requires examiners to ask the Court for directions if they can’t secure investment or if they can’t formulate proposals for a scheme of arrangement.

Court Report

As soon as practicable after appointment, an examiner must formulate proposals for a scheme of arrangement in relation to the company. The examiner must report on these proposals to the Court within 35 days of the appointment.

In practice, the meetings of creditors and shareholders rarely take place during the early days of an examinership and an application must be made to Court for an extension of time in which to present the report to Court. A Court can allow for the report to be presented to it at any time within the 70 or 100 day period of protection.

An extension in the overall period of protection could be accompanied by an extension of time for the examiner to report to the Court and the costs of an application to extend time would be dispensed with in many cases.

Section 512 of the Companies Act 2014

This section provides that a Court will not hear an examinership application if a receiver has been appointed over an asset of the company for at least 3 days prior to the date of the application for an examiner. The appointment of a receiver is very often the trigger event for a company to go down the examinership route. The section imposes a very tight deadline on companies with the commissioning and completion of the independent accountant’s report within 3 days presenting the main difficulty.

This deadline was at the forefront of receivership strategies adopted by secured creditors. In order to dissuade any attempts to have an examiner appointed within 3 days, receivers were often appointed on Fridays. Consideration should be given to extending this deadline to 5 or 7 days with a provision to extend further for a short period in certain circumstances at the discretion of the Court.

Creditor Meetings – Physical Distancing

One of the main functions of an examiner is to formulate proposals for a scheme of arrangement which is presented to shareholders and creditors in a series of meetings. UK legislation allows for virtual creditor meetings in the context of liquidations and these meetings can take place by way of conference call or video conference. Creditor meetings are often poorly attended or not attended at all and the introduction of virtual creditor meetings as part of the examinership regime may increase engagement. Virtual meetings would alleviate costs associated with room hire and travel and would facilitate increased participation by overseas creditors.

Amendment or Suspension of Reckless Trading Provisions

Section 610 of the Companies Act 2014 provides that a director of a company may be held to be personally responsible for all company debts if that director was knowingly a party to the carrying on of any business of the company in a reckless manner.

It has been suggested that this provision should be amended to allow in some way for the unpredictability of the impact of Covid-19. The far-reaching personal implications for a director of an otherwise sound company could lead them to deciding that the safer course would be to put the company into liquidation rather than to continue to trade in the run up to an examinership application.

Amending complex legislation within a short time frame can lead to uncertainty as was seen recently with the introduction of the Covid-19 Wage Subsidy Scheme and the easier course in respect of reckless trading may well be to suspend the applicable provisions for a limited time.

Section 570 of the Companies Act 2014

This section allows a creditor of a company to apply to Court for the appointment of a liquidator if a sum that is owed to the creditor is not paid 21 days after the service of a demand. An extension to the time companies have to respond to such demands may be introduced.


It has long been the view of insolvency practitioners that examinership is an under-utilised process for companies in financial difficulty. The majority of companies that opt for examinership return to trading and it is a viable option for SMEs and larger corporates alike. A targeted campaign could increase the awareness of examinership as a solution for companies trying to deal with the impact of Covid-19.

For further information please contact Raymond Lambe, or your usual contact in OSM Partners.