8th December 2021 |
The Companies (Rescue Process for Small and Micro Companies) Act 2021 inserts a new Part 10A into the Companies Act 2014 to provide for a dedicated rescue process for small and micro companies, the “Small Companies Administrative Rescue Process”.
While examinership is internationally recognised and successful in its own right, the associated costs mean it may be beyond the reach of small and micro enterprises. This new rescue process is designed to make rescue and restructuring more accessible and affordable to fundamentally viable companies experiencing temporary difficulties. These companies will now have access to an alternative framework which incorporates key elements of the existing examinership model in an administrative context, demonstrating Government’s commitment to providing a sustainable regulatory response to the challenges facing small and micro companies across the country.
The Act came into effect on 7 December 2021.
To avail of the rescue process, a company must meet the following criteria:
- The company must be a small or micro company as defined by the Companies Act 2014.
A small or micro company is one which meets two of the following three conditions:
(a) No more than 50 employees,
(b) Turnover must not exceed €12 million, and
(c) Balance sheet must not exceed €6 million.
- The company is, or is likely to be, unable to pay its debts;
- The company must not be in liquidation;
- The company must not have appointed an examiner or process adviser in the previous 5 years;
- If a receiver has been appointed to the company, the company is eligible only if that receiver has been appointed for a period of less than 3 working days.
In order to avail of the rescue process a company must also be fundamentally viable and capable of trading its way out of its current difficulties. Assessing the viability of the company is the first determination which the Process Adviser is required to make following his/her initial appointment by the Directors of the company.
Detailed information on the rescue process can be found in the information leaflet below.