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03 March 2009
In the first case on examinership to come before it in over 10 years, the Supreme Court has allowed an appeal against a High Court order refusing the petition of Gallium Limited (trading as the First Equity Group) for the appointment of an examiner and appointed Kieran Wallace of KPMG as examiner of the company. The Supreme Court delivered its reasoned judgment on February 3 2009.
Contrary to expectations, and despite having the opportunity to do so, the judgment provides no detailed guidance in relation to what must be contained in the independent accountant's report. While the judgment has not formally raised the bar in relation to the requirements of the independent accountant's report, it is possible, in light of comments made by the court at the hearing, that the bar may be raised in the future. If this happens, it is likely that the independent accountant will have to include more detail than has hitherto been the practice in relation to the basis of his or her conclusions.
The prudent approach would be to ensure that the court can be satisfied that the conditions identified by the independent accountant as being essential for the survival of the company (whether as regards to the internal management and controls of the company or otherwise) are achievable and, where possible, that the independent accountant's report gives evidence as to whether there is a reasonable prospect of those conditions being satisfied.
In the present case, in allowing the appeal against the order of the High Court, the Supreme Court was influenced by additional evidence which was placed before it on appeal and the fact that no creditors were opposing the petition.
In line with previous case law, the judgment notes the following:
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