SMEs opting for examinership saves 1,000 jobs

Nearly 1,000 jobs have been saved this year, through struggling SMEs selecting the examinership route as a rescue option.

New figures from chartered accountancy firm, Hughes Blake, show that 959 SME jobs have been saved to date in 2012 via examinership — representing a 67% year-on-year increase. The figure is also up from the 753 measured just two months ago by the same firm in its regular SME Examinership Index.

The latest data comes as new legislation is set to be passed, allowing small and medium-sized firms to apply directly to the Circuit Court for examinership. This new provision in the Companies Bill will also cut the legal costs of examinership for small businesses by as much as 50%.

Hughes Blake has long been an advocate of SMEs considering examinership as a rescue remedy and an important job-saving element.

Commenting yesterday, the firm’s managing partner, Neil Hughes said the latest job-saving figures reiterate “the significant role” the examinership process can play in saving jobs when companies find themselves in difficulty. He added that the current numbers should only be the tip of the iceberg.

“There’s no reason why we shouldn’t see a dramatic rise in these numbers once the new legislation has been enacted.

“I would conservatively estimate that the number of SME jobs saved could double in 2013,” he said.

“The key to this,” he said, “will be an increased awareness and understanding among struggling SMEs of the process itself, as well as of the new provisions being introduced by the Government.”

Data published last month by corporate recovery firm Kavanagh Fennell showed a levelling out of overall business failures; but also a notable shift in the type of corporate recovery measures being adopted by firms in trouble — with receiverships up by 43% and examinerships rising by 73%.

In future, companies satisfying two of three conditions — less than 50 employees, a turnover of under €8.8m and balance sheet value of less than €4.4m — will be able to apply directly to the courts for examinership.

“Under the current legislation, only 1% of insolvent companies in Ireland seek to restructure using examinership. This is in stark contrast to the US, where 22% of companies facing insolvency restructure using Chapter 11. Now, for the first time, small companies will be able to apply directly to their local court for examinership — offering them the option of trading out of their difficulties. This means more companies can survive and more jobs can be saved,” said Mr Hughes.