HORSE Sport Ireland’s decision to enter examinership is one of the most significant governance developments seen in Irish sport. Financial crises in sport are not uncommon, however, it is highly unusual for a national governing body with extensive state funding and national responsibilities to seek court protection.

To understand the implications, it is important to understand what examinership actually is. Introduced in Ireland in 1990, examinership is a corporate rescue mechanism designed to protect potentially viable companies that are experiencing financial difficulties.

It provides for a period of court supervised protection, which can vary in length from 70 days to potentially over 100. During this period, the company is protected from creditors while an independent examiner assesses whether the organisation can be restructured and continue operating.

During the process, debts may be restructured, liabilities reduced and new investment secured. Many well-known Irish businesses have successfully emerged from examinership and continued trading.

Sport, however, presents unique challenges. Unlike traditional businesses, sporting organisations often perform important community, cultural and regulatory functions. Irish courts have previously recognised this reality in examinership cases involving football clubs, such as Shamrock Rovers and Cork City, where wider community values were taken into consideration when determining their future. It does not mean examinership is painless. Creditors are frequently required to accept significant reductions in what they are owed in full and final settlement in order to preserve the organisation.

Vital role

What makes the HSI case particularly noteworthy is the organisation’s vital role within the wider sector. HSI is not simply a sporting body. It oversees high-performance programmes, international team participation, breeding initiatives, governance functions and the administration of large parts of Ireland’s equestrian infrastructure. As a result, examinership raises questions that extend beyond the future of just the organisation itself.

The situation also contrasts with previous crises in Irish sport. When the FAI faced severe financial difficulties, a formal examinership process was ultimately avoided in favour of alternative restructuring measures and governance reforms, primarily due to concerns as to how it might impact Irish teams’ ability to compete internationally. Another key difference between the FAI and HSI is the levels of government support. At the time of its difficulties, the FAI was in receipt of minimal government funds, whereas HSI relies very heavily on state support.

The route now being taken by HSI is therefore significant both legally and administratively. Questions around whether this examinership will have an impact at an international sporting level need to be thoroughly worked through.

Prospect of survival

The courts will ultimately focus on one central question: does HSI have a reasonable prospect of survival as a going concern? If the answer is yes, the examinership will hopefully provide the framework through which it can be achieved.

Perhaps the most important point for the wider equestrian community is that ultimately, while organisations may face financial difficulties, the sport itself continues. Governing bodies can be restructured, companies can change and administrative arrangements can evolve.

The foundations of Irish equestrian sport remain its riders, breeders, owners, coaches, officials, volunteers and supporters.

Dr Seán Ó Conaill is a Vice Dean at the School of Law at UCC and a Co-Director of the Centre for Sports Economics and Law