“No SME business is too small to save”
Examinership for SMEs has recently moved to the Circuit Court to reduce cost and make the process more accessible. However, regrettably an on-going perception continues to exist that the process of examinership is too expensive for small companies because it involves professional fees running to hundreds of thousands of euro.
This is not the case. Examinership is an accessible process for SME businesses.
This summary sets out the real costs of the process, in particular for small companies, and demonstrates that it is a process that is accessible to all SMEs in Ireland. Examinership gives struggling companies in Ireland a breathing space to allow them restructure and it is the only way under Irish law that a business can exit from an onerous upwards only lease. The professional costs of the process can be broken down into two areas; the petition costs and the actual examinership costs. There is no requirement to pay examinership costs up front.
Petition Costs for an SME
The legal costs associated with the presentation of a petition are €7k. In addition to this VAT is charged which is reclaimable.
The petition to appoint an Examiner that is lodged in court is usually accompanied by a report prepared by an Independent Accountant. This report can be prepared by the company’s own accountant or by a firm that specialises in this work. It typically carries a cost of €5k or less if prepared externally; however very often the report can be prepared for much less if carried out by the company’s existing accountant.
These costs are the only up-front costs that an SME business will have to pay to avail of examinership.
Examinership Costs for an SME
The actual professional costs of the examinership itself are never the personal obligation of directors or shareholders and are not required to be paid upfront by the business.
The professional examinership costs associated with a small company, for example a single unit retail business, typically work out at a level of €15k per month and are provided for as part of the package of measures that the examiner formulates, which is called the Scheme of Arrangement. The funds required to pay for the Scheme usually come from new equity investment, the sale of non-core assets, a trading surplus during the protection period or new borrowings.
For further information on the costs of examinership, contact Neil Hughes, Examiner at 01 66 99 999.
Download Article on the Cost of Examinership