Companies (Rescue Process for Small and Micro Companies) Act 2021

PART 1 General

1. Short title and commencement

1. (1) This Act may be cited as the Companies (Rescue Process for Small and Micro Companies) Act 2021.

(2) This Act shall come into operation on such day or days as the Minister for Enterprise, Trade and Employment may appoint by order or orders either generally or with reference to any particular purpose or provision and different days may be so appointed for different purposes or different provisions.

2. Definition

2. In this Act, “Principal Act” means the Companies Act 2014.

PART 2 Rescue Process for Small and Micro Companies

3. Rescue process for small and micro companies

3. The Principal Act is amended by the insertion of the following Part after section 558—

“PART 10A

Rescue Process for Small and Micro Companies

Chapter 1

Interpretation

Interpretation (Part 10A)

558A. (1) In this Part—

‘director’ includes a shadow director;

‘eligible company’ means a company which qualifies as—

(a) a small company in accordance with section 280A, or

(b) a micro company in accordance with section 280D;

‘excludable debt’ has the meaning assigned to it by section 558L(4);

‘interested party’, in relation to an eligible company, means—

(a) a creditor of the eligible company, or

(b) a member of the eligible company;

‘process adviser’ means—

(a) except as specified in paragraphs (b) and (c), a process adviser appointed by the directors of an eligible company by resolution mentioned in section 558E or 558ZX,

(b) in Chapter 2 of this Part, a process adviser acting under that Chapter, and

(c) in sections 558ZP, 558ZQ and 558ZAI and Chapter 11 of this Part—

(i) except where the context otherwise requires, a process adviser acting under Chapter 2 of this Part, or

(ii) a process adviser appointed by the directors of an eligible company by resolution mentioned in section 558E or 558ZX;

‘relevant court’, in relation to an eligible company, means, subject to section 558ZAF, the court determined by the process adviser under section 558H;

‘rescue period’, in relation to an eligible company, means the period—

(a) beginning with the passing of the resolution mentioned in section 558E(2) appointing a process adviser in respect of the eligible company, and

(b) ending on—

(i) the date on which the appointment of the process adviser is terminated under section 558ZK, or

(ii) in a case where the process adviser resigns and the directors of the eligible company do not appoint another process adviser, the date on which the process adviser resigns;

‘rescue plan’ has the meaning assigned to it by section 558B.

(2) For the purposes of sections 558Q, 558Y, 558Z and 558ZD, a member’s claim against an eligible company is impaired if—

(a) the nominal value of his or her shareholding in the eligible company is reduced,

(b) where the member is entitled to a fixed dividend in respect of his or her shareholding in the eligible company, the amount of that dividend is reduced,

(c) the member is deprived of all or any part of the rights accruing to him or her by virtue of his or her shareholding in the eligible company,

(d) the percentage of his or her interest in the total issued share capital of the eligible company is reduced, or

(e) the member is deprived of his or her shareholding in the eligible company.

(3) For the purposes of sections 558Q, 558Y, 558Z and 558ZD, a creditor’s claim against an eligible company is impaired if the creditor receives less in payment of his or her claim than the full amount due in respect of the claim at the date of passing of the resolution for the appointment of the process adviser.

Chapter 2

Introductory

Requirements where eligible company wishes to avail of rescue plan

558B. (1) This section applies where—

(a) the conditions specified in subsection (2) are met in relation to an eligible company, and

(b) the directors of the eligible company wish to avail of a rescue plan.

(2) The conditions referred to in subsection (1) are—

(a) the eligible company is, or is likely to be, unable to pay its debts,

(b) no resolution subsists for the winding up of the eligible company,

(c) no order has been made for the winding up of the eligible company,

(d) the directors of the eligible company have not passed a resolution for the appointment of a process adviser in respect of the eligible company during the period of 5 years ending on the date on which it is proposed that such a resolution be passed by the eligible company,

(e) no examiner has been appointed to the eligible company during the period of 5 years referred to in paragraph (d).

(3) For the purposes of subsection (2)(a), an eligible company is unable to pay its debts if—

(a) it is unable to pay its debts as they fall due,

(b) the value of its assets is less than the amount of its liabilities, taking into account its contingent and prospective liabilities, or

(c) the circumstances set out in section 570(a), (b) or (c) are applicable to the eligible company.

(4) A director of the eligible company shall—

(a) make a full inquiry into the affairs of the eligible company,

(b) prepare in the prescribed form a statement specifying the information set out in subsection (5),

(c) by statutory declaration confirm that he or she has complied with paragraph (a), and

(d) submit the statement and the statutory declaration to a process adviser.

(5) The information referred to in subsection (4)(b) is—

(a) particulars of the eligible company’s assets, debts and liabilities,

(b) the names and addresses of the eligible company’s creditors,

(c) particulars of each security given by the eligible company, including the name of the secured creditor and the date on which it was given, and

(d) such further or other information as may be prescribed.

(6) Where any false or misleading statement has been included in the statement of affairs referred to in subsection (4), any director of the eligible company who is in default shall be guilty of a category 2 offence.

(7) In any proceedings against a person in respect of an offence under subsection (6), it shall be a defence to prove that, having exercised all reasonable skill and care, the defendant had reasonable grounds for believing and did, up to the time of the issue of the document concerned, believe that the statement concerned was true.

(8) In this section, ‘rescue plan’ means a plan for an eligible company under this Part that is intended to secure the survival of the company, and the whole or any part of its undertaking, as a going concern.

Process adviser to determine whether eligible company has reasonable prospect of survival

558C. (1) This section applies where a director of an eligible company submits a statement and a statutory declaration to a process adviser under section 558B(4).

(2) The process adviser shall determine whether there is a reasonable prospect of the survival of the eligible company, and the whole or any part of its undertaking, as a going concern.

(3) In making a determination under subsection (2), the process adviser shall have regard to—

(a) the statement, and

(b) such of the matters specified in subsection (4) as appear to the process adviser to be relevant in the circumstances.

(4) The matters referred to in subsection (3) are—

(a) the nature of, and prospects for, the business of the eligible company,

(b) the availability of funding for, and investment in, the eligible company in the future, including expressions of interest by external funders,

(c) the cost structure of the eligible company, including any cost reductions already achieved or that may be achieved,

(d) whether projections and business plans for the eligible company are based on objective and independent evidence,

(e) whether the eligible company can generate a sufficient return to remunerate investment and repay funding,

(f) the wider economic situation,

(g) the circumstances of the market in which the eligible company is operating, including the likely future prospects of the market,

(h) the expertise, brand and historic success of the eligible company,

(i) where the eligible company is part of a group of companies, the place of the company in the structure of the group and its prospects in that context,

(j) whether a secured creditor has expressed an interest in (or attempted to initiate) a trading receivership,

(k) such other matters as the process adviser considers relevant in the circumstances.

(5) The process adviser shall—

(a) hold a meeting with the directors of the eligible company for the purpose of informing the directors of the determination and the reasons for it, and

(b) give the directors of the eligible company confirmation in writing of the determination and the reasons for it.

Process adviser to prepare report

558D. (1) This section applies where the process adviser determines under section 558C that there is a reasonable prospect of the survival of the eligible company, and the whole or any part of its undertaking, as a going concern.

(2) The process adviser shall—

(a) prepare a report relating to the eligible company specifying the matters set out in subsection (3), and

(b) submit a copy of the report to the directors of the eligible company.

(3) The matters referred to in subsection (2)(a) are—

(a) that the company is an eligible company which meets the conditions in section 558B(2),

(b) the names and addresses of the officers of the eligible company,

(c) the names of any other bodies corporate of which the directors of the eligible company are also directors,

(d) a statement as to the affairs of the eligible company, showing—

(i) in so far as it is reasonably practicable to do so, particulars of the eligible company’s assets and liabilities (including contingent and prospective liabilities) as at the latest practicable date,

(ii) the names and addresses of its creditors,

(iii) the securities held by each of them, and

(iv) the dates when the securities were given to each of them,

(e) the process adviser’s opinion as to whether any deficiency between the assets and liabilities of the eligible company has been satisfactorily accounted for or, if not, as to whether there is evidence of a substantial dissipation of property that is not adequately accounted for,

(f) a statement of the conditions or other matters which the process adviser considers are essential to ensure that the eligible company, and the whole or any part of its undertaking, would have a reasonable prospect of survival as a going concern, whether as regards the internal management and controls of the company or otherwise,

(g) the process adviser’s opinion as to whether the preparation, approval and taking effect of a rescue plan would offer a reasonable prospect of the survival of the eligible company, and the whole or any part of its undertaking, as a going concern,

(h) the process adviser’s opinion as to whether an attempt to continue the whole or any part of the undertaking would be likely to be more advantageous to the members as a whole and the creditors as a whole than a winding up of the eligible company,

(i) recommendations as to the course the process adviser thinks should be taken and the matters the process adviser thinks should be taken into account in relation to the eligible company including, if warranted, a draft of a rescue plan,

(j) details of the extent of the funding required to enable the eligible company to continue trading during the rescue period and the sources of that funding,

(k) the process adviser’s recommendations as to which liabilities incurred before the appointment of a process adviser should be paid,

(l) information about how this Part operates and its general effect, including information about the process of appointing a process adviser and potential costs and fees,

(m) the process adviser’s recommendation as to which court should be the relevant court for the purposes of any proceedings under this Part relating to the eligible company,

(n) such other matters as the process adviser thinks relevant, and

(o) such other matters as may be prescribed.

Chapter 3

Appointment of process adviser

Resolution to appoint process adviser

558E. (1) This section applies where a process adviser submits a report under section 558D(2)(b) to the directors of an eligible company.

(2) The directors of the eligible company may call a meeting of its board of directors at which a resolution to appoint a process adviser in respect of the eligible company shall be proposed and considered.

(3) Any meeting called under subsection (2) shall be held before the expiry of the period of 7 days beginning on the date on which the directors of the eligible company receive the process adviser’s report.

Process adviser’s duty to keep determination under section 558C under review

558F. (1) This section applies where a process adviser is appointed in respect of an eligible company and is without prejudice to section 558S(2).

(2) The process adviser shall keep under review during the rescue period the determination made in relation to the eligible company under section 558C.

(3) If, at any time during the rescue period, the process adviser determines, having regard to the matters specified in subsection (4), that there is no longer a reasonable prospect of the survival of the eligible company, and the whole or any part of its undertaking, as a going concern, the process adviser shall immediately—

(a) give notice of the determination to the directors of the eligible company, and

(b) resign as process adviser in respect of the eligible company in accordance with section 558ZW.

(4) The matters referred to in subsection (3) are—

(a) any material change in the circumstances of the eligible company,

(b) the discovery of any material inaccuracy in the information provided to the process adviser that was relied upon for the determination under section 558C, or

(c) such other matter as the process adviser considers relevant.

Duties of directors of eligible company in relation to process adviser

558G.(1) This section applies where a process adviser is appointed in respect of an eligible company.

(2) Where the process adviser gives notice to the directors of the eligible company under section 558F, the directors shall, as soon as reasonably practicable after the notice is given, take such steps as they consider appropriate for the purpose of protecting the interests of employees of the company.

(3) During the rescue period, the directors of the eligible company shall—

(a) co-operate with the process adviser for any purpose relating to the performance by the process adviser of his or her functions under this Part, and

(b) without prejudice to any other requirement imposed on them by or under this Part, disclose to the process adviser any information relating to the performance of those functions that is available to them.

Process adviser’s duty to determine relevant court

558H. (1) This section applies where a process adviser is appointed in respect of an eligible company.

(2) The process adviser shall, having regard to the matters mentioned in subsection (3), determine whether any proceedings under this Part relating to the eligible company shall be brought in the Circuit Court or the High Court.

(3) The matters referred to in subsection (2) are—

(a) the need to minimise costs by refraining from bringing proceedings in the High Court unless there are good reasons for doing so,

(b) the need for an efficient and expeditious conclusion to any proceedings brought under this Part, and

(c) any other relevant matter.

(4) Before making a determination under subsection (2), the process adviser shall consult the directors of the eligible company.

(5) The jurisdiction of the Circuit Court under this Part in relation to an eligible company shall be exercisable by a judge of the Circuit Court—

(a) for the circuit in which the registered office of the eligible company is situated at the time of the appointment of the process adviser or in which it has, at that time, its principal place of business, or

(b) if, at that time, there is no registered office of the eligible company and its principal place of business is outside the State, for the Dublin Circuit.

Process adviser’s duty to seek provision of email addresses

558I. (1) This section applies where a process adviser is appointed in respect of an eligible company by virtue of the passing of a resolution referred to in section 558E(2).

(2) As soon as practicable after the appointment, the process adviser shall give to each person specified in subsection (3) a notice in writing—

(a) requesting that the person provide the process adviser with an email address that the process adviser may use for the purpose of giving the person any notices and other documents that the process adviser is required or authorised to give to the person under this Part, and

(b) informing each such person that, if no email address is provided, the process adviser shall give the person those notices and other documents by sending them by post in accordance with section 558ZAI.

(3) Notice under subsection (2) shall be given—

(a) where the process adviser is aware of the person’s email address, by electronic means to that email address, or

(b) in any other case, in accordance with section 558ZAI(4).

(4) The persons are—

(a) employees of the eligible company,

(b) members of the eligible company,

(c) creditors of the eligible company,

(d) the Revenue Commissioners, and

(e) such other persons as may be prescribed.

(5) The process adviser shall keep records and supporting evidence of the means by which notice is given under this section.

Process adviser to give notice of appointment

558J. (1) This section applies where a process adviser is appointed in respect of an eligible company by virtue of the passing of a resolution referred to in section 558E(2).

(2) The process adviser shall, as soon as practicable and in any event no later than 2 working days after the passing of the resolution—

(a) deliver to the Registrar a notice of his or her appointment in the prescribed form, and

(b) file with the office of the relevant court a copy of—

(i) the resolution,

(ii) the process adviser’s determination made under section 558C and his or her report prepared under section 558D, and

(iii) where a process adviser has determined under section 558H(2) that proceedings under this Part in relation to an eligible company should be brought in the High Court, the reasons for the determination,

and