There has been a lot of talk in the media about examinership over the last week as Ireland’s first female Examiner was appointed by a Circuit Court Judge in Co. Meath. While it has been around now for almost 20 years, it has not been availed of as much as it should. There was a significant spike in the number of Examinerships in 2008 from the fall out of the financial crisis.  These in the main were in respect of property construction companies and seeking Court protection was a knee jerk reaction to what was taking place in the Irish property market. The vast majority of these examinerships failed as they had no prospect of securing investment. The market had virtually stalled and with lots of other economic factors at play both nationally and internationally weighing down on the economy at large, there was no appetite for investment.

Before a company enters the examinership process it needs to look at the end game and work back. Given that the timescales involved in the process are relatively short, before going into the process you need to know that you can get out the other end.  A fundamental requirement of the process is to secure funding. A company can only secure funding, be it equity or debt or a combination of both, if it has a solid core business which it can demonstrate has the ability to generate a profit which in turn will allow it to generate cash into the future to repay the funding that it requires to survive. As there is a wider variety of funding sources now available from both the debt and equity markets, there are more creative ways of securing funding.

While the economy has been in growth mode for the last number of years, not all companies are enjoying the fruits of this growth. While business will always be faced with challenging trading conditions as the market continues to evolve, what is really hampering some businesses growing is legacy debt which is not sustainable in the long term and this will eventually become too all consuming. In some instances, unanticipated events can unfold very quickly, impacting negatively on the financial position of a business requiring urgent action to save it.

For an examinership to be a credible option and to be successful, a company must engage early as often it is left way too late to seek advice by which time other factors outside the control of the company take over and force it in a direction that can be difficult to navigate with no option to turnaround on the road!

David Swinburne is a Chartered Accountant and Head of Advisory at Fitzgerald Legal & Advisory and has acted as Examiner with many successful outcomes.

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