Examinership ‘an option for SMEs’

Small firms in financial trouble are being urged to consider examinership as a potential rescue option; with new data showing that process to have saved nearly 800 jobs already this year.

A new “SME Examinership Index” from chartered accountancy firm, Hughes Blake shows that 753 jobs were saved in small and medium-sized firms during the first nine months of this year; compared to 404 in 2011. The company said the figures highlight the important role that the examinership process can play in saving jobs — calling the option an “under-utilised recovery scheme which offers court protection, preserves jobs and benefits creditors”.

“Contrary to what some businesses may think, examinership is accessible to practically all companies and I would urge any business owner or manager — particularly those in the SME sector — to research the option prior to taking the drastic step of triggering liquidation,” said Hughes Blake’s managing partner, Neil Hughes.

“The simple fact is that any company that has a reasonable prospect of survival and one that is viable going forward after restructuring can be a suitable candidate for examinership. Now, more than ever, in the current climate — where businesses are closing on a daily basis — a credible and robust formal recovery mechanism can play a crucial role in offering businesses a chance to restructure and survive as well as providing a crucial opportunity to save critical jobs.Insolvency figures released earlier this week, by corporate recovery firm Kavanagh Fennell, showed that nearly 400 companies failed during the third quarter of this year — with receiverships and liquidations the main result.

Separate figures recently showed that this year — to date — there have been just under 1,300 corporate insolvencies in Ireland, with only 12 examinership cases.

In Ireland, around 1% of annual business failures go down the examinership route; while the international average is 20%.

Hughes Blake’s Neil Hughes is concerned at the under-utilisation of the process, blaming it on a lack of awareness and understanding.

“While the uptake of examinership, as a recovery mechanism, is growing slowly, there is still a large scope for Irish businesses in difficulty to utilise the process instead of struggling on with debts or going into liquidation or receivership. It is pretty shocking that 99% of companies who experience trading difficulties go bust,” he said.

For an example, he pointed to the recent case of electronic goods retailer, Peats, which on the brink of liquidation went into examinership and came out the other end, with 27 jobs saved.