The Companies (Small Company Administrative Rescue Process and Miscellaneous Provisions) Bill 2021 was published on 11th May 2021. The Bill amends the Companies Act 2014 to provide for a new dedicated rescue process for small and micro companies known as The Small Company Administrative Rescue Process (SCARP). The Bill has secured government approval for the priority drafting.
The main objectives of the Bill are:
- addresses the need for a simplified restructuring process for viable small companies that is timely and cost effective
- mirrors key elements of existing examinership framework in an administrative context
- process commenced without the need for Court approval
- Bill also gives permanent statutory footing for virtual AGMs
- amends the Companies Act 2014 to progress recommendations made by the Company Law Review Group in relation to the provision of information to employees as creditors in a liquidation
The Bill ensures these SME companies will have access to an alternative framework, which incorporates key elements of the existing examinership model in an administrative context.
- designed for “small” and micro companies (as defined by the Companies Act 2014) which represent 98% of companies in Ireland
- commenced by resolution of directors rather than by application to Court
- concluded within a shorter period than examinership
- overseen and assisted by insolvency practitioners – a ‘Process Advisor’
- the rescue plan can be passed by a simple majority in value of creditors
- provides for format of cross class cram down of debts designed to reduce costs
- does not require application to Court for approval of rescue plan (provided no creditor objections)
- gives safeguards against irresponsible and dishonest director behaviour
Note: The content of this article is provided for information purposes only and does not constitute legal or other advice.