The facility to seek the protection of the High Court whilst negotiating a structured settlement with creditors on the back of further equity or equity equivalent investment is a highly beneficial procedure for companies with a sustainable commercial future but which are unable to pay their debts.

The procedure whereby a company may seek protection from its creditors was first introduced in the Companies (Amendment) Act 1990 and subsequently modified by the Companies (Amendment) No 2 Act 1999. The examination process during which the company concerned is protected from its creditors can last for a period of up to 4 months affording the examiner and the company ample opportunity to seek and negotiate the investment package required and to formulate a scheme of arrangement for the discounting and payment of creditors. The structure and costs associated with the process mean that it is not the panacea for all insolvent companies with a commercial future. However it should not be overlooked by any company of reasonable size / scale which is considering its options when faced with potential insolvency.

The legislation requires that appointment can only be effected by an application which is supported by an independent accountants report. In cases where serious loss may arise and immediate protection is required the court will appoint an examiner on an interim basis pending receipt of the report.

Mazars have been successfully associated with the roles of both examiner and Independent accountant in a number of high profile and complex cases and as such are well placed to be of assistance to companies who find themselves in this difficult position.

For more information email businessturnaroundinsolvency@mazars.ie

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