Examinership - Spring 2012

Author:Mr William Day, Kathleen Garrett and Brendan Cooney
Profession:Arthur Cox
 
FREE EXCERPT

Examinership is a court enforced moratorium on creditor action which allows a brief period during which a company can be restructured. It is similar in many ways to the Chapter 11 procedure in the United States. In addition to the automatic stay on creditors' rights, the process involves the appointment of an individual (invariably an accountant) to act as examiner. The examiner is charged with formulating proposals for a compromise or scheme of arrangement between the company and its members and/or creditors ("Proposals"). The examiner has no executive role and the company's directors and management will remain in control of the company and of its day-to-day operations throughout the protection period.

Ireland is subject to the EU insolvency regulation (1346/2000) (the "Regulation"). Examinership is a reorganisation or rescue process and appears in Appendix A to the Regulation. Accordingly, examinership can only form main proceedings.

The procedure is open to any company having its centre of main interests ("COMI") in Ireland. A related company to the company placed in examination that has its COMI in Ireland can also be admitted to the process. The definition of "company" for the purposes of the related company provisions includes unincorporated bodies as well as non-Irish incorporated companies.

The automatic stay on creditors' rights begins with the filing of a petition in the High Court in Dublin. In general, this petition can be presented by the company, by the directors, by shareholders holding at least 10% of the company's issued share capital, by creditors or the relevant minister or regulator. The filing of the documentation occurs without notice to anyone and is followed by an ex parte application to the High Court for directions (which should include a decision by the court of COMI). Prohibited creditor action include the appointment of a receiver or enforcement of security, the repossession of goods on lease or hire, or supplied on retention of title, liquidation, etc.. The moratorium can last for up to a maximum of 100 days by which time the examiner must have formulated and circulated his Proposals, convened and held meetings of all classes of members and creditors effected by his Proposals and reported back to the High Court.

The first opportunity creditors have to express their views on the matter is at the hearing in respect of the petition. This High Court hearing usually takes place seven to ten days after the date on...

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