Common use of Examinership Clause in Contracts

Examinership. Examinership is a court procedure available under the Irish Companies Act 2014 (as amended) (the "Companies Act") to facilitate the survival of Irish companies in financial difficulties. Iris or Xxxx XX, the directors of Iris or Xxxx XX, a contingent, prospective or actual creditor of Iris or Xxxx XX, or shareholders of Iris or Xxxx XX holding, at the date of presentation of the petition, not less than one-tenth of its voting share capital are each entitled to petition the court for the appointment of an examiner. The examiner, once appointed, has the power to set aside contracts and arrangements entered into by the company after this appointment and, in certain circumstances, can avoid a negative pledge given by the company prior to this appointment. Furthermore, the examiner may sell assets, the subject of a fixed charge. However, if such power is exercised the examiner must account to the holders of the fixed charge for the amount realised and discharge the amount due to the holders of the fixed charge out of the proceeds of the sale. During the period of protection, the examiner will formulate proposals for a compromise or scheme or arrangement to assist the survival of the company or the whole or any part of its undertaking as a going concern. A scheme of arrangement may be approved by the Irish High Court when at least one class of creditors has voted in favour of the proposals and the Irish High Court is satisfied that such proposals are fair and equitable in relation to any class of members or creditors who have not accepted the proposals and whose interests would be impaired by implementation of the scheme of arrangement. In considering proposals by the examiner, it is likely that secured and unsecured creditors would form separate classes of creditors. In the case of Iris or Xxxx XX, if the Trustee represented the majority in number and value of claims within the secured creditor class (which would be likely given the restrictions agreed to by Iris or Xxxx XX in the Conditions), the Trustee would be in a position to reject any proposal not in favour of the Holders. The Trustee would also be entitled to argue at the Irish High Court hearing at which the proposed scheme of arrangement is considered that the proposals are unfair and inequitable in relation to the Holders, especially if such proposals included a writing down to the value of amounts due by the relevant Issuer to the Holders. The primary risks to the Holders if an examiner were appointed to Iris or Xxxx XX are as follows: