The High Court refused to appoint an examiner to Step One Permanent Solutions Limited, an insolvent recruitment company, despite finding that it had a reasonable prospect of survival. The petition was opposed by the Revenue Commissioners, the company’s only creditor identified as likely to be affected by examinership.
In a judgment delivered on 6 May 2015, Ms Justice Baker said the company had significant historic and current Revenue liabilities and had failed for much of its existence to make VAT, PAYE and PRSI returns. The court described its finances as poorly managed and found that Revenue had been used as a “bank of last resort”.
An independent accountant’s report said the company could survive as a going concern if it obtained more invoice finance, tightened management controls and secured creditor and member approval for a scheme of arrangement. The company said discussions about investment and additional finance were ongoing. Revenue disputed whether there was a viable prospect of survival, but its counsel accepted that it was difficult to rule this out at that stage. Justice Baker concluded that the statutory threshold of a reasonable prospect of survival was met. She stressed that meeting the threshold did not require the court to appoint an examiner.
The court then exercised its discretion against the petition. It considered the company’s record of mismanagement and what it found was inadequate disclosure about links with AGC Temps Ireland Limited, a former recruitment business that went into liquidation with substantial Revenue debts. The judgment discussed contested evidence concerning personnel and possible interests in Step One, the transfer of AGC’s business and goodwill, and the role of a consultant. Justice Baker said she was not deciding disputed questions about beneficial ownership or the precise nature of individuals’ roles, but concluded that material matters had not been fully disclosed in the petition.
The court also considered employment. Step One had 16 permanent employees and up to 400 temporary agency workers on its books. Justice Baker accepted that permanent jobs were at risk, while noting that some could be lost even under a survival plan. She considered that temporary workers might move to other recruitment agencies or be hired directly by client businesses, though the transition might not be smooth. She found the company had not adequately protected permanent employees’ interests concerning PAYE and PRSI deductions.
Revenue’s position carried particular weight as the only creditor likely to be impaired by examinership. The court declined the petition and refused to appoint an examiner. It did not approve a restructuring scheme or make findings resolving the contested ownership and role questions discussed in the evidence.