Examinership saves 1,250 Irish jobs

Small and medium-sized firms struggling with legacy issues which have managed to stay in business to date may not survive as the economy picks up, it has been warned.
Examinership saves 1,250 Irish jobs

The warning comes as the Hughes Blake SME Examinership Index shows that more than 1,200 Irish jobs were saved through the examinership process this year.

The total of 1,251 is a marginal increase on the 2014 figure of 1,243 with a number of well-known retailers including Mothercare and Best Menswear emerging from examinership in the past 12 months.

Some 250 Mothercare roles were saved while 130 workers kept their jobs as a result of the menswear company’s successful examinership.

While consumers are again spending more on the high street and the economic environment is improving across the country, many firms struggling with legacy issues since the recession may become vulnerable and find it hard to stay in business, according to Hughes Blake Chartered Accountants managing partner, Neil Hughes.

Latest Central Statistics Office (CSO) figures show an annual increase in retail sales of almost 7% and a 3.5% increase in value terms.

Excluding motor sales, which have been particularly strong this year, the volume of sales is up 5.8% in the year to the end of October.

This increase will do little to shield vulnerable business from other developments, according to Mr Hughes.

“Through a combination of low interest rates and lenders’ unwillingness to address corporate insolvency issues, SMEs with distressed finances have continued to trade during the recession…

“Despite the prevailing positivity and the upbeat consumer sentiment, we are now seeing evidence that troubled SMEs, most notably in the retail sector, are realising that they need to address fundamental issues head-on to avoid simply limping towards inevitable closure,” said Mr Hughes.

“From Best Menswear to Mothercare, there are plenty of examples of retail names we are all familiar with opting to take the decision to restructure and survive this year.

"More jobs were saved by examinership in 2015 in SMEs compared with 2014, and we expect that trend to continue.

"Seeing other businesses beginning to make strides and undertake ambitious expansion plans will spur those with legacy issues to address them rather than continuing to do nothing in the hope that they will go away on their own.”

More than 3,325 jobs have been saved through examinership over the past three years with the number increasing each year.

Examinership, which offers an insolvent company court protection for up to 100 days while it seeks to restructure the business, has been available in Ireland since 1990.

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