SMEs to get less costly Circuit Court examinership
Published 22/11/2012 | 05:00
LONG-awaited plans to make examinership less costly for small businesses will be announced by Jobs Minister Richard Bruton today.
Under the plan, firms will be able to apply directly to the Circuit Court to have an examiner appointed to their companies instead of the more expensive Commercial Court process.
Most distressed small businesses let their companies go to the wall rather than using this costly route. A typical examinership could set a company back hundreds of thousands of euro.
Business lobbies and insolvency experts have called for change since the examiner system – which in theory gives firms a chance to avoid bankruptcy – was introduced in 1990 when the Goodman Group of companies appeared to be in danger of going out of business.
"Our concern is that examinership is too costly. The idea of this is to look at ways in which we could make the examinership process more available to a wide range of companies," Minister Bruton told the Irish Independent.
The announcement comes as a High Court judge said yesterday that the number of experts being called to give evidence in examinership cases is not just increasing costs – but his own blood pressure.
Mr Justice Peter Charleton said he hoped in the future to be able to limit expert evidence in dealing with continuing court protection for well-known chicken processing company, Cappoquin Chickens.
He said he was entitled to take costs into account and was not going to "sit in court listening to multiple experts".
"I've had too much of that in the past."
It did not seem to him to be necessary to put forward more and more experts. "It puts my blood pressure up," he said.
The total costs of the examinership, including legal fees, are estimated about €200,000.
The new initiative to allow small businesses to go to the Circut Court for protection comes as part of the Government's wide-ranging plans to help struggling small to medium-sized businesses across the country.
Mr Bruton said the initiative would help rescue businesses that were viable but for one reason or another got into trouble. Companies wishing to avail of the new regime will have to satisfy two of three conditions: the company's balance sheet must not exceed €4.4m, turnover at the company cannot exceed €8.8m and the company cannot have more than 50 employees.
"Small businesses employ over a third of all people working in Ireland. Small companies will be able to apply to the circuit court for examinership that will be cheaper and easier for businesses to restructure their debts," Mr Bruton said.
Separately, the Government is to begin drafting primary legislation to dissolve County & City Enterprise Boards (CEBs) and instead create a centre of excellence for small business within Enterprise Ireland. While the CEBs have proved popular, they are seen as too costly, with 38 CEBs spread out across the 26 counties.
The structure of the new service was laid out by the Government earlier this year based on proposals developed by Mr Bruton and Environment Minister Phil Hogan.
Richard Bruton interview: Business, Page 5
Indo BusinessFollow @Indobusiness