Examinership helps save 1,204 jobs in first half of the year

More than 1,200 jobs were saved as a result of the examinership process in the first half of 2014, according to a new study.

The latest Hughes Blake SME Examinership Index shows 794 jobs were saved in the second quarter after six firms - including the sports retail chain Elverys - successfully concluded the examinership process.

Examinership is a corporate rescue mechanism that allows insolvent companies that have a reasonable prospect of survival to seek court protection from creditors.

Elverys accounted for 654 of the jobs saved during the quarter. Last month the High Court approved a survival scheme for the company, which has 52 stores across the country.

The other five firms to exit the examinership process were five SMEs which operated across the hospitality, retail and construction sectors.

“While six companies successfully concluded examinership in the quarter, just five companies entered the process in the same period. It might be tempting to point to wider signs of economic improvement as a causal factor for that difference, but that analysis overlooks the wide range of businesses which have not addressed their debt burden and remain destined for insolvency,” said Neil Hughes, managing partner at Hughes Blake.

“The reality on the ground faced by many firms is that the ongoing recovery has come too late to enable them to meaningfully service their debts. Over the past number of years, the incentive has simply not been there for corporate borrowers which have fallen behind in their repayments to engage in a realistic assessment of their financial situation. A reluctance by lenders to enforce the security on unserviced business loans has meant that many firms have gotten by while making minimal or intermittent repayments,” he added.

Nonetheless, Mr Hughes said there was evidence of a better trading environment for many of the companies who were badly hit by the recession.

“When auditing companies among over 1,200 client firms in the second quarter this year, a trend has emerged. The majority had very challenging and sometimes loss making years in 2009, 2010 and 2011, held their own in 2012, and the vast majority have now started to grow again. This is a good indicator for the economy at large,” he said.