ORDINARY, unsecured creditors are likely to lose out, but the banks will be happy with the outcome of yesterday's High Court decision to refuse an examiners hip for Butler Engineering, according to accountancy sources.

In general, ordinary creditors do better in examinerships, because the examiner who is given the protection of the court while trying to put a rescue package together will come up with a plan which will give creditors some kind of dividend on what they are owed.

The first duty of the receiver, Mr Ray Jackson, will be to the secured creditors who appointed him.

Accountancy sources said last night that it was always going to be difficult for those seeking examinership to convince the High Court that this was the best option, because of the banks' and some creditors' opposition.

Managing the business in an examinership would require borrowing from banks and so their cooperation would be necessary.

"Generally the banks will seek to appoint a receiver if they have lost confidence in the management, as representing their best chance of getting some of their funds back," said one source.

Also, under examinership, an investor would have to provide a package whereby some of the company's debts were paid in receivership, the investor is simply buying the assets. The debts, which in this case exceed £24 million, are of no concern to that investor.

Mr Jackson has several options, including breaking up the business and selling off the assets piecemeal, or selling it as a going concern.

Sources also said that if the business was fundamentally sound the receiver should be able to find an investor. Prospects for continuing employment would be quite good. Although creditors might not get repaid what they are due, they would at least have some prospect of making money from an ongoing business.