Sharp increase in jobs saved through examinership
New data released to mark the end of the second quarter of 2017 has shown a sharp increase in jobs protected in examinership cases as businesses in Ireland face increasing uncertainty. The latest Baker Tilly Hughes Blake Examinership Index revealed that 112 jobs were saved through the examinership corporate recovery mechanism in the second quarter of 2017 in both SMEs and non-SMEs.
In recent months, the mechanism has returned to national prominence in cases such as the Regency Hotel in Dublin with the total number of jobs saved through examinership in the first half of 2017 standing at 492. This figure represents a 66% increase in the number recorded in the first half of 2016 when 297 jobs were saved, reflecting the continued importance of the examinership process.
Neil Hughes, Managing Partner at Baker Tilly Hughes Blake, said while it is welcome that 492 people are today employed who might otherwise not be, the fact that business owners in Ireland are increasingly turning to examinership reflects heightened uncertainty due to Brexit and the activity of Private Equity funds.
“Today’s findings show the existential importance of the still under-utilised examinership corporate recovery mechanism in assisting fundamentally strong small and large businesses in Ireland through periods of financial difficulty. Since its introduction by way of the Companies Act 1990, examinership has provided a flexible yet certain framework to help companies recover from insolvency. Businesses which have survived the worst depths of the recession should be protected and given a second chance in the face of a recovering economy,” he said.
“However, despite a backdrop of strong economic forecasts for 2017, both nationally and internationally, uncertainty about the external environment, both related to Brexit and the ever-changing international political landscape, is beginning to have an effect. Businesses in Ireland are facing the challenges of increased competitiveness pressures linked to the sizeable depreciation of sterling against the euro, a recent slip in consumer demand and critically also the activities of venture capital funds who have purchased thousands of business loans in Ireland.
Although smaller firms in Ireland are most exposed to Brexit-related risk given their dependence on exporting to the UK, no business on the island of Ireland is unaffected by a recent weakening in the resilience of the British economy,” he said.
Mr Hughes also warned of the more long-term effects of uncertainty and the growing needs for firms in Ireland to adapt to the post-Brexit economic environment.
“There is a fear that the current volatility surrounding the future of the UK-EU relationship may lead to exporting firms delaying their long-term investment plans and retrenching from ambitious international growth intentions. In this period of uncertainty, it is crucial that small and large businesses across Ireland develop new strategies in response to the evolving external environment. Should such strategies prove unsuccessful, it is comforting to know that a fall back option is in place to protect key elements of the Irish business community,” he concluded.