Close to 1,100 jobs have been saved since the beginning of the year by placing companies in examinership, the corporate rescue mechanism that allows troubled businesses to seek court protection from creditors.
Accountancy firm Hughes Blake published figures today showing that the process saved a total of 1,089 jobs in small and medium-sized companies since the beginning of the year, a 52 per cent increase on 2013.
Changes that allow smaller companies to seek examinership in the low-cost Circuit Court rather than the more expensive High Court have helped to drive the increase, according to the firm.
Hughes Blake said that 539 jobs were saved in the third quarter alone, which was the first period during which the news Circuit Court examinerships becamme avaialable. The firm’s SME Examinership Index, published today, contains the figures.
Its managing partner, Neil Hughes, explained that while the economy is recovering, the index shows that a large number of small and medium-sized companies throughout the Republic still need to restructure debts dating back to the bubble era.
“For many, the challenges of the past few years are not over and the reality is that they aren’t yet on a viable footing for a sustainable future,” he said. “Addressing the issues through an examinership is emerging as a preferred route for those companies as they are in a position to prove that they have a real prospect of survival in the future.
“In the past quarter there were 10 successful examinerships concluded - this resulted in securing 539 badly needed jobs in those companies rescued. The fact that companies can now engage in the process through the Circuit Court rather than the High Court is expected to continue to increase the numbers coming through,” Mr Hughes added.
Hughes Blake partner, Joe Walsh was appointed examiner to childcare company, Celbridge Playzone, the first company to successfully go the Circuit Court route. It emerged form examinership last July with all 33 jobs saved.
The firm expects to see hotels and and bars, particularly from outside Dublin, applying for Circuit Court examinerships over coming weeks and months.
To qualify for examinership companies must be insolvent, or close to, but be able to demonstrate that they have a reasonable prospect of survival. They are then given court protection from creditors for up to three months while the examiner draws up a rescue plan or scheme of arrangement. This generally involves creditors taking a haircut in the sums due to them.
