959 SME Jobs Saved Through the Examinership Process During 2012
- Latest figures from the Hughes Blake SME EXAMINERSHIP INDEX show 67% year on year increase on number of SME jobs saved
- New legislation introducing SME examinership in the Circuit Court set to cut legal costs of the process by up to 50% and could ‘double’ rate of jobs saved in 2013
Friday 21st December 2012
The latest figures released today from the Hughes Blake SME Examinership Index show that 959 SME jobs were saved through the examinership process in the 12 months of 2012. This figure represents a year on year increase of 67% on 2011, during which 574 jobs were saved.
Today’s figures come as new legislation is set to be passed by the Government which will allow SME’s to apply directly to the Circuit Court for examinership. Hughes Blake estimates that this new provision in the Companies Bill could cut the legal costs of examinership by up to 50%, making the process a more accessible and affordable option for SMEs and potentially doubling the number of jobs that could be saved in 2013.
Under the new legislation, companies who satisfy two of the following three conditions – less than 50 employees, turnover less than €8.8m and a balance sheet value not exceeding €4.4m – will be able to apply to the Circuit Court to enter examinership. As a company must be insolvent to apply, in reality most companies will have to satisfy just one of the first two conditions above.
First released in October of this year, the Hughes Blake SME Examinership Index tracks the incidence of SME examinerships in Ireland together with the total number of jobs saved through the process. Chartered Accountancy Firm Hughes Blake has developed considerable expertise in the field of examinership having acted either directly or indirectly in over 100 examinerships in Ireland in recent years
Speaking about the latest figures from the index and the upcoming change in legislation, Neil Hughes, Managing Partner of Hughes Blake said: “Today’s figures reiterate once again the significant role the examinership process can play in saving jobs when companies find themselves in difficulty. However these figures are just the tip of the iceberg and there is 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”.
“The key to this will be an increased awareness and understanding among struggling SMEs of the process itself as well as of the new provisions now being introduced by the Government. 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 courthouse for examinership, offering them the option of trading out of their difficulties. This means more companies can survive and more jobs can be saved as we emerge from recession.”
Available to businesses in Ireland since 1990, examinership is a rescue process designed to help businesses recover from insolvency by the appointment of an examiner, usually a practicing accountant. The process offers significant advantages including the protection of an insolvent trading business with a reasonable prospect of survival, thereby allowing it to continue to trade, attract investment and restructure, preserving employment, goodwill and work in progress, all the while delivering a better return to creditors than would be the case in a winding up.
For the purpose of the Index, only SME businesses with less than 250 employees are included. Accordingly the successful examinership carried out by Eircom and Atlantic Homecare earlier this year with circa 6,300 jobs saved and Xtravision in 2011 with circa 1,200 jobs saved, have not been included in the figures due to the fact that they are large companies rather than SME businesses.
Often seen as the backbone of the Irish economy, SME businesses in the Republic of Ireland are the focus of the Index.
Hughes Blake Chartered Accountants, which offers a full range of professional services, has developed considerable expertise in the field of examinership. With offices in Dublin, Cork and Enniscorthy, its team of examinership advisors have acted either directly or indirectly in over 100 examinerships in Ireland in recent years. Hughes Blake also provides corporate finance services through its dedicated corporate finance practice, as well as the full range of taxation, audit and accounting services.
The Hughes Blake SME Examinership Index is published on a quarterly basis.