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Small Company Administrative Rescue Process (SCARP)

The Companies (Rescue Process for Small and Micro Companies) Bill 2021, which provides for the Small Company Administrative Rescue Process (SCARP) was published in late June. The purpose of the Bill is to provide an alternative to examinership, for the benefit of small and micro companies, which is more accessible and cost efficient than the existing examinership process and capable of conclusion within a shorter period of time and to assist viable small and micro companies to remain in business while trading through periods of temporary difficulty.

The requirements an eligible company must meet to avail of a rescue plan are defined in section 3 of the Bill. The principal conditions are:

  1. the company is, or is likely to be, unable to pay its debts,
  2. no resolution subsists for the winding up of the company,
  3. no order has been made for the winding up of the company,
  4. the company directors have not passed a resolution for the appointment of a process adviser in respect of the company during the 5-year period ending with the date on which it is proposed that such a resolution be passed by the company or no examiner has been appointed, and
  5. no petition for examinership is currently before a court or no examiner has been appointed to the company concerned.

The legislation requires that the process adviser must give a notice in writing to the creditor concerned requiring the creditor to inform the process adviser, within 14 days of the giving of the notice if they object to the inclusion of the excludable debt in the rescue plan. Excludable debt pertains to unpaid taxes and liabilities with respect to the Revenue Commissioners and the Department of Social Protection and other liabilities arising from the Redundancy Payments and Protection of Employees Acts. (i.e., State creditors, such as Revenue, can opt to have unpaid taxes excluded from the rescue plan.)

Minister for Trade Promotion, Digital and Company Regulation, Robert Troy TD, announced the publication of the Bill in a press release, where he said: “This legislation is a key part of Government’s response to the economic impact of COVID-19 and provides for a rescue framework (SCARP) aimed at small and micro companies, many of which have faced significant challenges throughout the pandemic and continue to face challenges as the economy reopens.”

The Bill and explanatory memorandum are available on the Oireachtas website.