Earlier this year we summarised the provisions contained in the Companies (Miscellaneous Provisions) Act 2013 (the “Act”) which granted the Circuit Court jurisdiction to deal with examinership applications in respect of small private companies which meet certain criteria. This process is becoming commonly referred to as “examinership lite”.
A “small company” is defined as one which satisfies two or more of the following conditions for a given year and for the preceding financial year:
- The turnover for that year does not exceed €8.8 million;
- The balance sheet total for that year does not exceed €4.4 million;
- The average number of employees in the company for that year does not exceed 50.
Section 2 of the Act, which was signed into law on 24 December 2013, could not be commenced until new Circuit Court Rules were put in place. The Circuit Court Rules (Examinership) came into effect on 14 July 2014, which also marks the date the examinership lite process came into operation. It is worth noting that all aspects of the process, other than the court in which such cases are heard, remain unchanged.
Small companies experiencing financial difficulties are now able to apply directly to the Circuit Court for protection. The Companies (Amendment) Act 1990 did previously allow for a High Court petition to appoint an examiner to be remitted to the Circuit Court in circumstances where the company had liabilities of less than €317,434.52. In March of this year, Celbridge Playzone Limited became the first company in Ireland to successfully petition the Circuit Court for the appointment of an examiner under that mechanism. That case remains ongoing.
Applications and proceedings under the new Circuit Court Rules will be much more straightforward. Under the new Rules, applications can be made either in the county in which the registered office of the company is located or has its principal place of business at the time of presentation of the originating notice of motion. If, at the time of application, there is no registered office of the company in Ireland and the company’s principal place of business is outside the State, applications must be brought in the Dublin Circuit Court.
Given the continuing important role the SME sector plays in Ireland’s economy, the examinership lite process is a welcome development.