Insolvency practitioners have welcomed the government’s publication of a new Bill providing for a new dedicated rescue process for small and micro companies.

The Companies (Small Company Administrative Rescue Process and Miscellaneous Provisions) Bill 2021 will amend the Companies Act to make it easier and less costly for small companies to access rescue processes.

Restructuring and Insolvency Ireland chairman Mark Woodcock said: “The Bill provides an alternative to examinership, for the benefit of small and micro companies, which is more cost efficient and capable of conclusion within a shorter period of time.

“We welcome the provision which will allow landlords’ leases to be repudiated. We also note the provision that state creditors, such as the Revenue Commissioners, must provide reasons if they wish to ‘opt out’  of a SCAR process and we hope that when the legislation is drafted the reasons are not so broad as to materially affect the amount of companies that can rely on the process.

“It appears from the Bill as presently drafted that it would be the courts who would approve fees of the process advisor if the SCARP fails. Given that a driving force of SCARP is to provide a more affordable rescue mechanism for SMEs, we believe that the fees for the process advisor in a failed SCARP should be approved by the creditors directly, and that the courts should only become involved if agreement is not possible."

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Woodcock added that RII is concerned that the process advisor may, under the Bill as drafted, be obliged by ODCE to seek restriction or disqualification of directors in certain circumstances. 

"We believe any role of restriction/disqualification should be carried out by a duly appointed liquidator," he said: "Requiring a process advisor to issue restriction/disqualification proceedings would lead to great costs and present a dilemma as to whether a process advisor could confirm that any SCARP could be successful."

Restructuring and Insolvency Ireland was formerly the Irish Society of Insolvency Practitioners, set up in 2004 to provide, among other things, a forum for consideration and discussion of the practice and law of insolvency in Ireland, with a particular focus on enhancing the knowledge and expertise of its members, who come mostly from the accountancy and legal professions.