It was announced on 11 May 2021, that Minister for Trade Promotion, Digital and Company Regulation, Robert Troy TD had received government approval for the priority drafting of the Companies (Small Company Administrative Rescue Process and Miscellaneous Provisions) Bill 2021. This is very welcome news for indebted small business owners as, should it become law, it will provide for a new dedicated rescue process for small and micro companies.
The Bill seeks to provide these smaller companies with access to a more affordable alternative to examinership, while still incorporating key elements of the existing examinership model in an administrative context.
The Small Company Administrative Rescue Process (SCARP) 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.
The main provisions of the Bill can be broadly summarised as follows:
SCARP also incorporates sufficient safeguards for the protection of creditors:
While there is still likely some way to go before this new insolvency procedure is in place, if implemented it is likely to be of great assistance to the small and micro business sector as a restructuring and rescue tool, and in particular for companies struggling as we emerge from the COVID-19 pandemic.
Please contact a member of our restructuring and insolvency team if you wish to confidentially discuss the above or any other restructuring requirements and receive a no-obligation consultation.