The Irish Society of Insolvency Practitioners is calling for urgent reforms to deal with the unprecedented challenges presented by Covid-19.

Jim Stafford of Friel Stafford, chairman of ISIP’s representation committee, said existing Examinership legislation makes it too costly a rescue tool for the majority of SMEs.

Stafford (pictured) added that ISIP is recommending a number of changes to make the process more affordable and more useful to SMEs. These changes include the following:

• Combining the role of the Independent Accountant with that of the Examiner. Such a change would save significant costs.
• Temporarily relaxing the rule on liquidity requirements for companies entering Examinership.
• That the initial admission of companies to Examinership would be done through the Insolvency Service of Ireland, in a similar way to how the ISI admits private individuals to Personal Insolvency Arrangements and Debt Settlement Arrangements.
• Extending the period of protection afforded by Examinership.

ISIP has welcomed the guidance recently provided by the CCABI on the holding of virtual creditors meetings. However, legislation has to be amended to allow such meetings to take place.

In Association with

ISIP is also proposing a number of technical changes to legislation to assist smoother running of PIAs and DSAs. “A key change that is urgently required is the lifting of the €3 million cap on secured lending which is currently preventing many business people from re-entering business in a productive capacity,” said Stafford.

ISME Proposals

ISME, the small firms lobby group, has also drawn up detailed proposals for reform of the Examinership process.

The association notes that if even 5% of Ireland’s 271,000 companies were to cease trading as a result of Covid-19, over 13,000 insolvencies could result, with all the consequential job losses.

"Examinership is not the most logical route for these businesses to follow," says ISME. "We propose the adoption of a simplified, fixed cost Examinership regime, which is administered outside the courts in the first instance. Administrative Insolvency would be conducted by a single practitioner, would cost approximately €15,000 and (depending on how far advanced funding negotiations are) could take less than 70 days to complete."

Download ISME's Examinership reform proposal here.