Small Companies Administrative Rescue Process
8 Dec 2021
The Companies (Rescue Process for Small and Micro Companies) Act 2021, commenced on 8th December 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”.
The Small Company Administrative Rescue Process is designed to address the specific needs of small and micro companies in financial difficulties. It allows viable companies experiencing temporary financial problems to restructure with the agreement of creditors. It has limited court involvement where creditors are engaged in the process and are positively disposed to a Rescue Plan. The process mirrors elements of examinership but in a simplified administrative content, thus reducing court involvement, making it potentially both quicker and cheaper
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 this information leaflet.