Legislation for rescue framework for small companies clears Oireachtas
The Companies (Rescue Process for Small and Micro Companies) Bill 2021 has passed through all the legislative stages in the Oireachtas and will now be sent to the president for signature.
The bill will amend the Companies Act 2014 to provide a new dedicated rescue process for small and micro-companies. This will be based on a new rescue framework, the Small Company Administrative Rescue Process (SCARP).
The new framework will mirror the key elements of the existing examinership framework in an administrative context including the repudiation of onerous contracts, cross-class cram down of debts, and encourages ongoing creditor engagement. The process also allows companies to apply for a stay on proceedings.
The proposed process will also be more cost-efficient and capable of conclusion within a shorter period of time than examinership.
Robert Troy, minister for trade promotion, digital and company regulation, said: “This bill is the culmination of a year-long effort to ensure that we have in place the necessary legal framework to help viable companies stay in business as we emerge from the pandemic.
“The bill provides for a streamlined, workable and practical process to allow these companies restructure and continue to trade. It is built on a tried and tested framework, examinership, and with the benefit of input from business, trade unions, insolvency practitioners and legal practitioners. It is clear from the broad welcome of the bill that our approach was correct and strikes a fair balance between stakeholders affected by corporate rescue.”
He noted: “The bill also provides for amendments arising from the Company Law Review Group’s first phase of work in the area of employees’ rights as creditors under the Companies Act, in line with the recently published Plan of Action on Collective Redundancies following Insolvency.
“The plan has been broadly welcomed by the social partners and in particular the Irish Congress of Trade Unions. I am grateful to all involved for their constructive engagement in this space and look forward to our continued work together.”
Mr Troy added: “Delivering the Bill in advance of the summer recess was an ambitious task and would not have been possible were it not for the support of all members of the Oireachtas. It is a real demonstration of what can be achieved when we engage constructively and pragmatically for the benefit of our country.”