SME Specific Corporate Rescue

31 years since the introduction of Ireland’s first ‘Corporate Rescue’ procedure, Examinership and 7 years since the introduction of it’s ‘derivative’, commonly referred to as ‘Examinership – Lite’, the Government, in response to the unprecedented economic damage of Covid 19, have recently made a very welcome announcement of a Public consultation process to explore the introduction of a new ‘Corporate Rescue’ process specifically aimed at SME’s.

One suggested title for the new rescue procedure is the ‘Summary Rescue Process’ and it is suggested that the process could be started and completed without any time being spent in a Courtroom, which has the potential to significantly reduce the cost of the process and thus hopefully make the ‘Summary Rescue Process’ truly accessible for our vitally important SME sector.

Given that we have had Examinership for over 30 years, but despite it’s longevity it only accounts for about 5% of our Corporate Insolvency activity, the ‘Summary Rescue Process’ has the potential to be a ‘game changer’. It’s arrival, if it can be rapidly delivered, could provide SME’s hit by the economic impact of Covid 19 with a viable and affordable rescue process.

In order to make the ‘Summary Rescue Process’ as robust as possible, Deloitte have made the following key recommendations in response to the Government’s consultation invitation:

• There must be a viable business, with a reasonable prospect of survival
  
• An immediate moratorium from creditor action
  
• Directors to maintain day to day control during the restructure
• All creditors to be included in the restructuring plan (no excluded creditors)
  
• Restructuring by simple voting majority of one creditor class (Over 50% in value)
• Restructuring plan resulting in any affected creditor not being worse off than on liquidation or Receivership of the Debtor
• A fixed & truncated timeframe to complete the restructure plan
• Court involvement on an exception basis

We hope the introduction of the ‘Summary Rescue Process’ heralds the dawning of a new age in SME restructuring and we urge the legislators to allow ‘B2B’ restructuring to develop unfettered by excessive ‘red tape’, where the involvement of the Courts would only be required on an exception basis and also to ensure that the ‘Summary Rescue Process’ is inclusive of all creditors, including the state.

Anything short of that could leave the ‘Summary Rescue Process’ only suitable for very limited scenarios, which would be a great opportunity missed.