At least 17 retailers are lining up bids for court protection from their creditors, after new laws to introduce cheaper “examinership-light” circuit court processes came into effect on Christmas Eve.
President Michael D Higgins on Tuesday signed the Companies (Miscellaneous Provisions) Bill into law, after Richard Bruton, the Minister for Enterprise, stripped its proposals out of a larger piece of legislation in October and fast-tracked it under pressure from retail lobby groups.
Small companies who fulfil certain conditions relating to the size of their staff and turnover can now avail of cheaper examinerships in the circuit courts, as opposed to the traditional route of going to the High Court. Circuit court legal fees are on average at least 30 per cent cheaper.
Rescue packages
It is expected that many retailers will use the new, cheaper examinership process to apply for rescue packages that involve repudiating upward only leases and writing down rent levels.
Retail Excellence Ireland (REI), which lobbied the government to introduce measures to combat upward only rents, said it was working with "17 companies that are now actively considering examinership".
The group said that individual convenience stores operating as franchisees of the larger symbol groups are prominent among those who were preparing “examinership light” bids.
"We are also assisting a number of small fast-food type operations, with between one and three units each," said REI's chief executive David Fitzsimons. "The retailers looking at examinership light are primarily located in shopping centres, where they have been unable to negotiate reductions in their rents."
REI said that while the new laws would cut legal fees associated with examinerships, the measures were “not good enough” because the new law does not “give absolute clarity” to judges on how to repudiate retail leases.
Mr Fitzsimons said this meant that some circuit court examinerships could be challenged by disgruntled landlords, forcing up costs for retailers and negating the advantages of the new regime.
“We made representations to the government over this, but it appears no cognisance was taken,” he said.
The new law signed this week by President Higgins also contains laws to allow for greater information exchange between industry regulators and the Director of Corporate Enforcement on white collar crime, as well as measures to prepare to change the way the auditors of large comoanies, such as banks, are regulated.
