The examiner of Bell Lines, Mr David Hughes of Ernst & Young, is to ask the High Court for an extension of the examinership period. His initial report shows that the company and its related subsidiaries are capable of survival and that a scheme of arrangement would facilitate this survival.

The initial statement of affairs, filed by the directors, showed a surplus of £8 million. However, a subsequent statement, by the examiner, showed a deficit of £21 million. This arose from a £13 million writedown of assets, a provision of £5 million for contingent liabilities and subordinated loans of £11 million which were not reflected in the first statement.

Trading in the first four months of the examinership period has been "very strong with continued support from all employees, trade creditors and suppliers", according to a statement issued by Mr Hughes yesterday.

The funding arrangements put in place following the appointment of the examiner gave the company the necessary resources to meet all essential payment to date. The examiner noted that these "should ensure that sufficient resources are available for the remainder of the examination period".

Mr Hughes stressed that some difficult decisions would have to be made as part of the restructuring. However, when formalised, they "will be in the best interest of all parties concerned".

The proposals which will involve creditors and shareholders are expected to be formalised in eight weeks time.