Press release
Minister Troy announces the commencement of dedicated rescue process for small companies
From Department of Enterprise, Trade and Employment
Published on
Last updated on
From Department of Enterprise, Trade and Employment
Published on
Last updated on
Robert Troy TD, Minister for Trade Promotion, Digital and Company Regulation, has announced the commencement of the Companies (Rescue Process for Small and Micro Companies) Act 2021.
The commencement of the Act makes the small company administrative rescue process available to all eligible small and micro businesses in the country.
Announcing the commencement, Minister Troy stated:
"Ireland’s small and micro companies are the backbone of our local communities and our national economy, but the past two years has seen a disproportionate and negative impact on these businesses as a result of the pandemic. Throughout this period and to ensure their long-term survival Government prioritised policies to support this vital sector.
"A central part of that effort has involved a complete review of the restructuring and rescue mechanisms available to small companies in difficulty. This entailed a comprehensive review of the existing regulatory framework and an assessment of all available policy options. Arising from this review we set ourselves the ambitious task of creating an entirely new procedure to address the specific needs of small companies.
"This work has been a personal priority since my appointment as Minister, therefore I am very pleased to announce the commencement of the new Small Company Administrative Rescue Process."
The legislation provides a new simplified restructuring process for viable small companies which is more cost and time-effective, initiated by companies themselves, and commenced without the need for Court approval.
Minister Troy continued:
"This rescue process is modelled on our existing examinership process and founded on a bedrock of well understood procedures and precedents. It is a simplified and effective process that I believe will give small and micro companies a genuine opportunity to restructure and continue to trade. If any small business is experiencing temporary difficulties but is fundamentally viable, I would encourage them to consider this process as a suitable option."
Further information on the small company administrative rescue process is available at enterprise.gov.ie/RescueProcess
As part of the government’s medium-term stabilisation response to the economic challenges of the pandemic, and in keeping with commitments contained in the Programme for Government, the Companies (Rescue Process for Small and Micro Companies) Act 2021 provides for a stand-alone rescue framework for small and micro companies. It is recognised that Ireland’s existing framework, examinership, while internationally recognised and successful in its own right, may be beyond the reach of small companies due to the associated costs. In this regard, the Tánaiste wrote to the Company Law Review Group (CLRG[1] ) requesting it to examine the issue of rescue for small companies and make recommendations as to how such a process might be designed. The provisions of the Act emanate from the CLRG’s subsequent recommendations.
The rescue process seeks to mirror key elements of examinership in an administrative context thereby reducing court oversight, resulting in efficiencies and lower comparable costs. It has limited court involvement where creditors are engaged in the process and positively disposed to a rescue plan.
[1] The CLRG is a statutory advisory body charged with advising the Tánaiste on all matters pertaining to company law in the public interest. Membership of the CLRG is representative of the broad range of company law stakeholders making it uniquely well positioned to provide a nuanced view on the issue of rescue for small companies.
The Act delivers a new simplified restructuring process for viable small companies which is:
The main provisions of the Act can be broadly summarised as follows:
The process also incorporates sufficient safeguards for the protection of creditors:
The Act further amends the Companies Act 2014 to progress recommendations made by the CLRG in relation to the provision of information to employees as creditors in a liquidation and which are in line with the Plan of Action on Collective Redundancies following Insolvency. It amends the 2014 Act to clarify that liquidators have the power to bring and defend proceedings in the Workplace Relations Commission (WRC) and Labour Court and provides a dedicated position for an employee representative on the committee of inspection set up to oversee a liquidation.