Minister Troy opens public consultation on proposed ‘Summary Rescue Process’
08 February 2021
Minister for Trade Promotion, Digital and Company Regulation, Robert Troy T.D. today (Monday, February 8, 2021) launched a public consultation seeking views on the proposed ‘Summary Rescue Process’, a restructuring framework suitable for the rescue of small and micro companies, to inform the development of the General Scheme of the Bill.
As part of the Government’s medium-term stabilisation response to the economic challenges of the pandemic, and in keeping with commitments in the Programme for Government, it is proposed provision is made for a stand-alone process outside existing frameworks for the rescue of small companies. In this regard, the Tánaiste wrote to the Company Law Review Group (CLRG) requesting it to examine the issue of rescue for small companies and make recommendations as to how such a process might be designed.
The CLRG submitted its report in October 2020 and has recommended a “Summary Rescue Process” which should be a stand-alone process separate from the examinership process, but which would mirror key elements of the examinership legislation. Such a process would:
be designed for “small” and micro companies (as defined by the Companies Act 2014) which represent 98% of companies in Ireland,
be commenced by resolution of directors rather than by application to Court,
be concluded within a shorter period than examinership,
be overseen and assisted by insolvency practitioners,
provide that the rescue plan be passed by a simple majority in value of creditors,
provide for format of cross class cram down of debts designed to reduce costs,
not require application to Court for approval of rescue plan (provided no creditor objections), and
have safeguards against irresponsible and dishonest director behaviour.
It is envisaged that this process will reduce the associated costs and regulatory burden for ease of access for small companies while also maintaining appropriate safeguards for creditors.
The Minister for Trade Promotion, Company Regulation and Digital, Robert Troy T.D. said: “This consultation is an important phase in the development of the Summary Rescue Process. The issue of company rescue has become ever more urgent as companies struggle with the continued impact of COVID-19. Following receipt of the Company Law Review Group’s Report, and as Minister with responsibility for matters of company law, I instructed officials from my Department to immediately consider the recommendations contained in the report and begin the necessary work to develop the proposals.”
He continued: “While we know that examinership is internationally recognised and works well in its current form, the associated costs are beyond the reach of our small and micro enterprises and act as a barrier to access. This must be addressed as smaller businesses continue to struggle with the impact of the pandemic on their liquidity.
“Small and micro enterprises account for the majority of companies in Ireland and support somewhere in the region of 788,000 jobs. I know that small local businesses like newsagents, hairdressers and cafés will play an integral role in our country’s economic recovery following this pandemic. Supporting their viability remains a key priority for Government.”