Examinership – My understanding of it

This is a mechanism for ailing but potentially viable companies to be rescued and returned to profitability.  It was introduced by the Companies Act of 1990 and 1999 and is somewhat similar to chapter 11 in the US and administration in the UK though the latter gives more support to the creditor than the debtor.  The period given for examinership is up to 100 days.

Examinership allows a company a period of protection from creditors in order to work out a plan for fresh investment and most likely the writing off of claims from creditors.  The court appoints an examiner who tries to come to an arrangement for the company that is acceptable to the creditors.  The court has to be satisfied that the creditors wouldn’t be worse off than they would if the company was liquidated.

The directors continue to manage the company whilst in examinership (unlike administration in the UK where the administrators take over).

An unsuccesful examinership ends in liquidation.

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