SME examinership costs to fall 30%

SMEs should be able to apply to the Circuit Court for examinership — thus reducing such costs by around 30% — by the end of the year.

Jobs and Enterprise Minister Richard Bruton yesterday announced the fast-tracking of long-awaited legislation allowing firms looking for court protection, via the examinership process, to apply through the Circuit Court rather than the High Court, which on average costs 30% more, depending on the complexity of the case.

About 960 SME jobs were saved through small firms going into examinership last year. The new legislation — provision for which was included in the Companies Bill last December — is aimed at offering a route out of difficulties for firms who, despite having high growth and job creation potential, are constrained by legacy debt problems.

“We believe if we can create a mechanism for them to deal with these legacy problems we can not only save large numbers of jobs but also unlock the potential for the growth and job creation we so badly need,” Mr Bruton said yesterday.

The Government is hopeful of enacting the legislation by Christmas. Mr Bruton said it will make it cheaper and easier for businesses to restructure debts.

“This will mean that more businesses can survive their current difficulties and start to grow, meaning, that more jobs will be saved and more jobs will be created in this hugely important part of the economy,” he added.

The new companies bill will also include other measures to reduce costs for businesses and improve the enforcement of company law.

Yesterday’s update has been warmly welcomed by commentators and industry representatives.

“Ireland’s small business sector is deeply embedded in the Irish economy; and this legislation will give small firms a real opportunity to survive current difficulties and focus on a route of growth and sustainability needed to create jobs,” said Avine McNally, acting director of the Small Firms Association.

Ms McNally said that due to the cost of applying for examinership to the High Court, only around 1% of SMEs are currently opting for the examinership process as a way of trading out of their difficulties; with the remaining 99% or so going into liquidation or receivership as a result.