Cheaper and faster SME protection laws set to be passed by the summer

Minister of State Robert Troy said the Government aims to have in place, by the summer, a simpler and less costly restructuring process for struggling SMEs.

The Government intends for the long-awaited overhaul of insolvency legislation – making it cheaper, faster, and easier for viable small companies to restructure if their survival is at risk following the removal of Covid supports – to be in place by the summer.

Passing of the proposed small business rescue legislation has long been seen as key to the survival of many SMEs currently being propped up by the Government’s Covid supports. It will act as a simpler and less costly alternative to examinership and court protection.

While company insolvency cases fell by 30% in the first quarter of the year, the widely-held view is that the true picture of how healthy many companies are is being concealed by the various Government supports in place and the real insolvency map may not be visible until later this year.

Robert Troy, the Minister of State for Trade Promotion and Company Regulation, said the Government has approved the priority drafting of the Small Company Administrative Rescue Process and Miscellaneous Provisions Bill and the bill will be enacted by the summer recess. The bill is aimed at better protecting as many as 98% of Irish companies.

“I know that examinership works and saves both companies and employment. However, as it is overseen by the court from beginning to end, it can be an expensive undertaking – and thus out of reach for your average small company, whether that be a local restaurant or hairdresser,” Mr Troy said.

Alternative to examinership

“The Companies [Small Company Administrative Rescue Process and Miscellaneous Provisions] 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,” he said.

The new system for company restructuring will differ from examinership in that it won’t require High Court application for approval of a rescue plan and can be commenced through the resolution of directors. A rescue plan can be passed by a simple majority in value of creditors and gives safeguards against irresponsible and dishonest director behaviour.

“As the economy re-opens, we must have an appropriate regulatory response which supports fundamentally viable companies to continue to trade and get themselves back on their feet,” Minister Troy said.