The financial thresholds of the Small Companies Administrative Rescue Procedure (SCARP) have been increased, meaning that SCARP is now a potential option for a larger number of companies in Ireland.

SCARP, which was introduced in 2021, aims to provide a cost-effective restructuring option for viable but insolvent companies. It is available to small and micro companies as defined in the Companies Act and is not an option for larger companies, which must use other restructuring mechanisms.

On Wednesday 19 June 2024, the Irish Corporate Enforcement Authority ("CEA") published its first-ever annual report. The Annual Report covers the 18-month period from July 2022 (when it replaced and assumed the responsibilities of the Office of the Director of Corporate Enforcement) to 31 December 2023.

Supervision of corporate insolvency

The CEA has a statutory role in supervising the liquidation of insolvent companies and taking enforcement actions in respect of struck off insolvent companies.

The Small Company Administrative Rescue Process (SCARP) was first introduced on 7 December 2021, to provide a quicker and more affordable formal restructuring process to businesses in Ireland. SCARP allows businesses to restructure their debts by agreeing to a rescue plan with their creditors.

Overview

The Irish Minister for Enterprise, Trade and Employment signed into law the European Union (Preventive Restructuring) Regulations 2022 on 29 July 2022. This is the first significant piece of legislation dealing with corporate rescue in Ireland since 1990, when the jurisdiction's examinership process was first codified.

Two years on: review of CIGA permanent measures

Since our last blog on this topic, the English court has provided further guidance on certain key issues and novel features relevant to restructuring plans and schemes of arrangement in its recent judgments on Amigo Loans, Smile Telecoms, EDF & Man, Re Safari Holdings (Löwen Play) and Haya. This piece provides an overview of key points from these cases.

Government support during the pandemic and extremely strong credit markets saw exceptional fund raising levels in 2021, in spite of a slower Q4. Borrowers secured increasingly favourable terms from their lenders, with only a little pushback as the year progressed. Private credit continued to compete for greater market share and found interesting opportunities in smaller and more complex names. 2021 has proved to be a record year for financings and the continued availability of cheap capital, with reasonable stability and outperformance from riskier credits.

The restructuring plan has so far proven to be a powerful tool to facilitate restructurings of complex capital structures. Two recent cases provide further helpful guidance for advisers when formulating a restructuring plan and for investors who may be affected by its terms.

Amicus Finance plc (in administration) ("Amicus")

The judgment of Snowden J. in the adjournment of the convening hearing relating to a scheme of arrangement (the “Scheme”) proposed by Indah Kiat International Finance Company B.V. (“Indah Kiat”) emphasises some important points that must be borne in mind by debtors, investors and advisers when preparing for a scheme, such as the importance of allowing sufficient time for preparation of all relevant supporting evidence and documentation, and allowing for a realistic notice period for creditors.