A new rescue process for small companies in financial difficulty has been introduced in Ireland. The new process solidifies Ireland’s position as an international leader in this field.
The Companies (Rescue Process for Small & Micro Companies) Act 2021 commenced on 7th December.
The Act creates a framework which was specifically designed for the financial rescue and restructure of small and micro companies. This framework is called the Small Company Administrative Rescue Process (SCARP).
Ireland’s existing framework for examinership was used in order to create this rescue process. The Minister of State for Trade Promotion, Digital and Company Regulation, Robert Troy said that the new process seeks to mirror key elements of examinership in an administrative context. The Minister says it will thereby reduce court oversight, resulting in efficiencies and lower comparable costs.
This new simplified and effective framework aims to have limited court involvement. It allows creditors to engage positively with the process and be a part of the rescue plan. It aims to give small and micro companies a genuine opportunity to restructure and continue to trade.
The SCARP is available to small and micro companies as defined under sections 280A and 280D of the Companies Act 2014. Outlined below is how small and micro and companies are identified, by satisfying at least two of these characteristics:
|Turnover not exceeding:
|Balance Sheet Total not exceeding:
|Average number of employees not exceeding:
If you are a micro or small company and want to avail of the process, here’s the procedure:
It remains to be seen whether this new process will differ from examinership in practical terms. But it does appear to be a more cost-effective way of restructuring a company in difficulty.
For advice on commencing the rescue process for small companies, please contact our dispute resolution and restructuring team: firstname.lastname@example.org or email@example.com .
Orpen Franks Solicitors LLP
28 & 30 Burlington Road, Dublin 4, Ireland
Telephone: +353 1 637 6200
Facsimile: +353 1 637 6262