Insolvency Schemes: Examinership, Receivership and Liquidation
Examinership, Liquidation and Receivership are the three main insolvency schemes in Ireland; they are provided for in Part VII and Part VIII of the Companies Act 1963 as amended in 1990. The main differences between examinerships, liquidations and receivership are outline below;
Examinership
Examinership is a process where a Company that is insolvent or likely to become insolvent may be placed under the protection of the Court for a period of up to 100 days so as to enable the Examiner to formulate a settlement with creditors which is then presented to the Court for approval. During the protection period, no action may be taken by creditors to enforce their debts or their security against the Company in general terms. No Liquidator or Receiver may be appointed. There may be no attachment or execution of Judgements during this period. There may be no action to realise security or repossess goods other than goods held by way of retention of title.
Essentially, there is a freeze on most creditor remedies against the company so that the company is given a breathing space during which the Examiner may formulate a potential rescue plan which hopefully may be of benefit not only to the company but to its entire body of creditors.
It is usually the directors of the company who apply to the Court to put the Company into Examinership. However, the company itself or shareholders holding not less than 10% of the issued share capital or any creditor may also apply.1
An application to appoint an examiner to a company should be commenced by way of petition in the High court. Every petition for the appointment of an examiner must be verified by an affidavit which in most cases is sworn in by the petitioner.
Section 3(9) of the companies (Amendment) Act 1990 says that the High Court may on the making of such interim orders or such other orders as the court may think fit, remit the matter to the circuit Court where the liabilities of the company do not exceed €317500.2
Examinership
Examinership is a process where a Company that is insolvent or likely to become insolvent may be placed under the protection of the Court for a period of up to 100 days so as to enable the Examiner to formulate a settlement with creditors which is then presented to the Court for approval. During the protection period, no action may be taken by creditors to enforce their debts or their security against the Company in general terms. No Liquidator or Receiver may be appointed. There may be no attachment or execution of Judgements during this period. There may be no action to realise security or repossess goods other than goods held by way of retention of title.
Essentially, there is a freeze on most creditor remedies against the company so that the company is given a breathing space during which the Examiner may formulate a potential rescue plan which hopefully may be of benefit not only to the company but to its entire body of creditors.
It is usually the directors of the company who apply to the Court to put the Company into Examinership. However, the company itself or shareholders holding not less than 10% of the issued share capital or any creditor may also apply.1
An application to appoint an examiner to a company should be commenced by way of petition in the High court. Every petition for the appointment of an examiner must be verified by an affidavit which in most cases is sworn in by the petitioner.
Section 3(9) of the companies (Amendment) Act 1990 says that the High Court may on the making of such interim orders or such other orders as the court may think fit, remit the matter to the circuit Court where the liabilities of the company do not exceed €317500.2
References: Case Law; Re Gasco Ltd unrep High Court Feb 5 (2001) Re Hefferon Kearns Ltd [1992] I. L.R.M 51 Re Readymix Limited (2002) Re Squash (Ireland) Ltd [2008] 2 ILRM 420 Shawinigan v Vodkins (1961) 1 W.L.R