When the balance sheet tips, four statutory routes exist: examinership, the Small Company Administrative Rescue Process (SCARP), liquidation and receivership. Each route triggers a different playbook for owners, lenders and employees, yet the boundaries overlap. Choosing well and choosing early decides whether a firm re-emerges or disappears.
Under Examinership, a Court protection freezes creditor action for up to one hundred days while an independent examiner prepares a scheme of arrangement. Directors stay in charge day-to-day and work with the examiner on investment, cost cuts or debt write-downs.
SCARP offers similar breathing space to smaller companies but avoids court hearings.
David O'Connor, Partner in the Business Restructuring department leads the team who prepares independent expert reports for all the above processes.
Smaller companies will often prefer the newer SCARP process, because examinership is quite expensive. The same insolvency practitioner acts from start to finish, which trims fees and shortens timelines.
Cost and suitability
Examinership’s court involvement adds expense. Boards hesitate when legal and advisory fees could top €300,000.
Smaller firms owe far less and cannot fund the process
You need to be of a certain size to justify going into the examinership. SCARP cuts that hurdle because one practitioner fills the dual role of independent expert and process adviser, reducing duplication.
History shows rescue can work. The Goodman Group examinership in 1990 restructured wartime debt and protected thousands of jobs in the beef industry. More recently, Big Mike's restaurant in Dublin used SCARP to prune debt and safeguard employment.
O’Connor’s team provided the independent expert report for a nationwide food chain that entered examinership this month.
There is a requirement for an independent expert to show that if this company goes into examinership, then there’s a high probability it will succeed. The court accepted the report and appointed an examiner, opening a path to protect potentially significant jobs.
Creditors influence direction, too. A lender can pre-empt examinership by appointing a receiver the moment a covenant is breached. Conversely, a successful examinership can bind secured lenders if the courts are satisfied the scheme treats them fairly.
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