The new dedicated rescue process for small companies, that makes restructuring faster, cheaper and more efficient, launches from today.
Similar to examinership, the scheme is available to eligible to all small and micro businesses in the country.
However, examinership was seen as too slow and cumbersome for many small firms, leading the Government to accede to calls for a more streamlined process for SMEs.
The Company Law Review Group was asked to consider the matter and following the issuing of its recommendations, the new process was drawn up and put into legislation.
It can be initiated by companies themselves and can be commenced by the directors without the need for court approval.
An insolvency practitioner is then appointed by the company to engage with creditors and prepare a rescue plan which must be in the best interests of creditors and provide each with a better outcome than a liquidation.
By the 42nd day after the practitioner's appointment, creditors are invited to vote on the plan.
Once 60% of impaired creditors back the plan, it is approved without the need to seek court approval, although creditors can raise an objection to the plan within a 21-day cooling off period.
If an objection is raised, the company must seek court approval.
The process is concluded within 70 days, less than half the maximum time allowed for examinership.
State creditors such as the Department of Social Protection and Revenue can "opt out" of the process if, for example, the company has a bad track record of tax compliance.
Safeguards are also in place for a range of other creditors and against irresponsible and dishonest director behaviour.
Minister for Trade Promotion, Digital and Company Regulation, Robert Troy, who commenced the Companies (Rescue Process for Small and Micro Companies) Act 2021, said it would help small and micro companies which are the backbone of local communities and the national economy.
"It is a simplified and effective process that I believe will give small and micro companies a genuine opportunity to restructure and continue to trade," he said. "If any small business is experiencing temporary difficulties but is fundamentally viable, I would encourage them to consider this process as a suitable option."
Although so far the rate of insolvencies has not risen as a result of the pandemic, experts expect that as Government supports are gradually withdrawn, that could change.