The High Court has granted Eircom an interim examinership, the largest examinership in Irish corporate history.

Mr Justice Peter Kelly said he was satisfied the company is insolvent and that examinership would provide for a better outcome than receivership or a winding up of the group.

Eircom’s requested examinership is to protect the company from its creditors for up to 100 days and to allow it time to restructure its debt.

Michael McAteer of Grant Thornton has been appointed interim examiner and the examinership petition will be heard on April 18th.

Judge Peter Kelly said today Eircom was the subject of a game of "corporate pass-the-parcel." In this case "the parcel lost," he said, referring to the debt taken on by the company during the changes of ownerhship since it was privatised.

Eircom told the High Court yesterday it is seeking to reduce its headcount by 1,000 over a five-year period up to mid-2017 as part of a wide-ranging plan to put the heavily indebted company on a sounder financial footing.

As part of its petition for the appointment of an interim examiner to co-ordinate a restructuring of its gross €4.1 billion debt, Maurice Collins, for Eircom, said a five-year business plan drawn up by management also involved a €1.3 billion investment in its network.

Mr Collins yesterday outlined how the restructuring would leave Eircom with debts of about €2.34 billion. He said 80 per cent of first lien lenders had agreed to a haircut of €407 million on their €2.695 billion debts.

A majority of second lien lenders had also consented to their €350 million debts being reduced to €35 million - a 90 per cent cut. About €1.05 billion is owed to two categories of loan note holders who face being wiped out.

Mr Collins said there were a number of “unusual features” to the proposed examinership.

He said the debts of the company were “too heavy for the group to bear” and the situation had come to a head in June 2011 when it breached its banking covenants.

Trading is “positive” in general terms but had deteriorated in 2011. Mobile division Meteor made a loss last year, he added.

Since then, he said management and the company’s board had “responsibly and carefully engaged” with its lenders and shareholders to find a remedy to its financial difficulties.

Mr Collins said Eircom was “up to date with all trade creditors”.

“The companies propose that arrears [accumulated] in the ordinary course of business would be discharged.”

Mr Collins said Eircom was “clearly insolvent” but added that the proposed restructuring gave the company a chance of operating successfully into the future.

“One can say with more than usual confidence that the companies have a reasonable prospect of survival as a going concern.”

Eircom chief executive Paul Donovan welcomed today's decision and advised customers that it was "business as usual" during the examinership process.

"Customers can be reassured that all voice, broadband and data services will continue. In addition, the company will honour all outstanding work and payments to suppliers. Staff will continue to be paid on time," he said.

"We fully intend to honour our existing investment commitments, including fibre rollout to deliver high speed broadband and TV services for eircom customers. This network upgrade is already underway and new services should be offered later this year."

Additional reporting: Bloomberg