Founded in 1994 as a specialist insolvency and restructuring firm, Friel Stafford continues to be one of the busiest insolvency practices in the country, according to Tom Murray, a partner.

“2024 was another very busy year for our insolvency and restructuring teams.

“Even in the best of economies, companies face challenges and difficulties, and we have been well positioned to assist them,” he says.

“In particular, we were very active with creditors’ voluntary liquidations, High Court liquidations and the Small Company Administrative Rescue Process [Scarp].”

The key development for Friel Stafford since 2023 has been and continues to be leveraging off being part of Ifac.

“We have over 30 offices in the country now and can truly claim to be a national service with insolvency staff based in other offices apart from our historical Dublin base,” Murray says.

“This has been reflected in appointments from Donegal to Cork and almost every county in between.”

Murray says Friel Stafford is seeing a trend where directors are engaging earlier with the firm.

This makes sense, given that a business is more valuable as a going concern than when subject to a forced sale.

“Let’s be frank — it is well recognised that the commencement of insolvency procedures in relation to a company almost invariably has an adverse effect on the value of its business,” he notes.

“Accordingly, when a company is facing financial difficulties, serious consideration must be given to whether the company can be rehabilitated without resort to formal insolvency procedures.

“Companies that act early are able to formulate a greater number of possible options and sustain their success for longer periods. Each turnaround is unique, and the action to be taken needs to be tailored to suit the circumstances.”

Murray’s key advice to an SME considering restructuring is “act early, meet an experienced insolvency advisor and take professional advice” but also trust your instincts.

“No one knows their business better than the directors themselves,” he says.

Fundamentally, the principal duties of a director are owed in the first instance to the company itself.

Once insolvency becomes a real possibility for the company, under the Companies Act 2014, the primary duty of the directors shifts in favour of the company’s creditors.

As such, steps should be taken to preserve assets and to minimise losses to creditors, Murray says.

“Directors should not assume that the safest course of action is to cease trading. Directors may be faulted just as much for a premature cessation of trade as for continuing to trade while insolvent.

“You could say they are damned if they do — damned if they don’t!

In this regard, a decision to continue to trade while insolvent risks personal liability for the directors and should only be taken based on clear legal and financial advice which the board carefully documents and reviews frequently.