The Process of Examinership

20 April, 2020

As companies of all sizes continue to grapple with the continued uncertainty created by the Covid-19 crisis, problems of liquidity and solvency will become more widespread.

What is Examinership?

An examinership involves the court placing a company under its protection to enable a court appointed examiner to investigate its affairs and to report to the court on the prospects of its survival. Where survival can be achieved, the court may sanction a Scheme of Arrangement which often involves the part-payment (or less often the complete non-payment) of certain of the Company’s creditors and which enables the company to continue in business.

The examinership process is designed fundamentally to assist companies that have fallen into financial difficulty, but remain viable business prospects.

Section 509 Companies Act 2014 (the “Act”)Power of court to appoint examiner

(1) Subject to subsection (2), where it appears to the court that

(a) a company is, or is likely to be, unable to pay its debts,

(b) no resolution subsists for the winding up of the company, and

(c) no order has been made for the winding up of the company,

the court may, on application by petition presented, appoint an examiner to the company for the purpose of examining the state of the company’s affairs and performing such functions in relation to the company as may be conferred by or under this Part.

(2) The court shall not make an order under this section unless it is satisfied that there is a reasonable prospect of the survival of the company and the whole or any part of its undertaking as a going concern.

(3) For the purposes of this section, a company is unable to pay its debts if—

(a) it is unable to pay its debts as they fall due;

(b) the value of its assets is less than the amount of its liabilities, taking into account its contingent and prospective liabilities.

The intention of the section is to provide a potential rescue for ailing but potentially viable companies.

Who may petition the High Court for the appointment of an examiner?

  1. The company itself;
  2. A majority of the directors of the company;
  3. A creditor (including employees); and   
  4. Member(s) holding not less than 10% of the issued and paid-up share capital of the Company.

What is required to make the application under Section 509 of the Act?

The exact extent of required documents will vary depending on the company and what specifically needs to be presented to make the case under Section 509 of the Act. However in all circumstances the following documents are required:

  1. The Petition – This sets out the case for examinership. You must outline in detail the background and context in which the company has fallen into financial difficulty and demonstrate why and how the company is unable to pay its debts as they fall due. Crucially it must also show that notwithstanding the financial difficulties of the company at the time of the presentation of the petition, ultimately the company will have a reasonable prospect of survival as a going concern. The Petition will also set out how the petitioners propose to fund the company during and after the period of protection. The petitioners will also set out the name of the person they request be appointed as examiner.  
  2. Independent Expert’s Report (“IER”) – This must be prepared by a suitably qualified and experienced insolvency practitioner. The IER will contain a statement of affairs of the company setting out the particulars of the assets and liabilities of the company. Ultimately it must support the case outlined in the petition. The IER will also set out the precise extent of the funding required to enable the company to continue trading during the period of protection and the sources of that funding. Essentially the IER will set out the financial plan of the company from the point of presentation onwards.
  3. Grounding Affidavit and Relevant Exhibits – Relatively speaking, the Grounding Affidavit will be very similar in form and wording to the Petition (this makes sense as the contents of the Petition are rooted in the sworn evidence provided in the Grounding Affidavit). All relevant evidence that supports the Petition will be appended to the Grounding Affidavit as Exhibits. The nature of the Exhibits will vary depending on the company. In all cases, up to date management accounts, balance sheet, profit and loss accounts and cash flow statement should be provided. In addition any relevant minutes of meetings of directors or shareholders. (Note: If the directors/shareholders have resolved to go into examinership, a meeting must be held and the relevant minutes and resolutions must be signed and exhibited in the affidavit). The Grounding Affidavit is then sworn by the petitioner or by an individual acting on their behalf (chairman of the board of directors etc.).   

The presentation of the Petition under Section 509 of the Act is an ex-parte application. In the ordinary course this is not an issue as the protection of the High Court will be to the mutual benefit of the directors/shareholders as a whole.

The examinership application is one of Uberrima fides. The petitioner must be able to show that the application is being made in utmost good faith and in no way would constitute an abuse of process. For example, it cannot be used as a remedy for an oppressed shareholder or by a creditor seeking to gain an advantageous position. 

Commencement of High Court Protection

• The protection of the High Court will commence from the time that the Petition was presented not the date that the order was issued (similar to winding up proceedings).

• Fundamentally the most important effect of the appointment of an examiner is that creditors will not be able to enforce their security against the company during the period of protection. The period of protection will last for 70 days from the date the Petition was presented. The period protection can, in certain circumstances be extended for a period of 30 days.

• Where a petition has been presented, a CRO Form E24 must be filed within three days of the date of presentation of the Petition (not from the date of the appointment of the examiner).

• Notice of the appointment to be posted in Iris Oifigiúil within 21 days of the appointment.

• Notice of the appointment to be posted in 2 daily newspapers within 3 days of the appointment.

Section 520(4) of the 2014 Act sets out the scope of the protection as follows:

(a) no proceedings for the winding up of the company may be commenced or resolution for winding up passed in relation to the company and any resolution so passed shall have no effect; 

(b) no receiver over any part of the property or undertaking of the company shall be appointed, or, if so appointed before the presentation of a petition shall, subject to section 522 , be able to act; and

• where any claim against the company is secured by a mortgage, charge, lien or other encumbrance or a pledge of, on or affecting the whole or any part of the property, effects or income of the company, no action may be taken to realise the whole or any part of that security, except with the consent of the examiner.

Powers of the Examiner

Unlike in the case of a liquidator, the powers of the directors do not transfer automatically to the examiner (although an examiner can seek a court order to this effect under Section 528 of the 2014 Act). The primary powers are:

  1. To obtain information – it is essential that the examiner be given the “full picture” regarding the financial position of the company if a workable Scheme of Arrangement is to be produced. There is an obligation the officers of the company under Section 526 of the 2014 Act to produce the relevant documents and evidence to enable the examiner to do this;
  2. To seek directions from the High Court – the examiner must apply to the High Court to determine any important question that arises in the course of his/her function as examiner (often this will be in circumstances where the actions of the examiner could have a serious impact on certain stakeholders e.g. employees);
  3. To discharge pre-petition debts – such actions will be done subject to the recommendations of the IER;
  4. To borrow on behalf of the company – the proposed transaction must be sanctioned by the High Court;
  5. To deal with charged property – the examiner may (with the approval of the court) dispose or otherwise deal with property that was subject to a floating charge. The court must be satisfied that the selling of such assets will help to facilitate the survival of the company as a going concern; and
  6. To certify expenses – liabilities incurred during the period of protection that are certified by the examiner in writing will be treated as valid expenses of the Company (Section 529 of the 2014 Act). 

Schemes of Arrangement

A Scheme of Arrangement is in effect, a statutory mechanism whereby a company reaches agreement with its creditors with respect to restructuring its debts.

The framework of a Scheme of Arrangement involves creditors and shareholders being organised into individual classes. Following a consultation process between the examiner and the creditors, a compromise or “cramming down” of the debts owed to certain classes of creditor may be put in place.

Who needs to approve the Scheme of Arrangement?

The Scheme of Arrangement that is ultimately proposed by the examiner does not require the approval of each individual class of creditor. The approval of only one class of creditor is sufficient for the examiner to proceed to court to seek an order confirming the Scheme of Arrangement. The Scheme of Arrangement is also presented to the company’s shareholders but their consent is not required.

Any shareholder or creditor may object to the examiner’s proposals and they will have an opportunity to do so before the court. Once the court has considered the implications of the Scheme of Arrangement for each individual class of creditor and/or shareholder, it may then confirm, modify or reject it. If confirmed, the Scheme of Arrangement will then be binding on all parties regardless of whether or not they consented to it.


If you have any queries or if you would like to discuss the content in further detail, our team of experienced professionals would be happy to assist. 

For other relevant information, including contact details of the relevant team members, please see below: Restructuring & Insolvency

This note is for general information purposes Legal advice must be obtained for all individual circumstances. While every effort has been made to ensure the accuracy of this note, no liability is accepted by the author or Flynn O’Driscoll for any inaccuracies. 


James joined Flynn O’Driscoll in 2007, he became a Partner in January 2014 and was elected Managing Partner in June 2019….

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Conall obtained an honours Bachelor of Law and German degree from Trinity College Dublin graduating in 2015…..

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