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.

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.

Pension issues in the American Airlines (AMR) bankruptcy¹ have resulted in the Internal Revenue Service (IRS) issuing new final regulations, effective November 8, 2012 (Final Regulations), which broadly impact all debtors facing underfunded pension plan obligations. The Final Regulations provide chapter 11 bankruptcy debtors facing distress terminations of their tax-qualified defined benefit pension plans with the additional option of amending the plans to eliminate accelerated payment options.

The term “frenemy” – a combination of the words friend and enemy – has emerged from modern vernacular to describe someone who is simultaneously a partner and an adversary. The term is perhaps perfectly emblematic of the restructuring process where various constituents make and break alliances in an effort to steer the restructuring process. In so doing, the lines between friend and enemy are often blurred or altered during the course of the restructuring.

In Ogle v. Fidelity & Deposit Co. of Maryland, 586 F.3d 143 (2d Cir. 2009), the Second Circuit has now become the second circuit court of appeals to recently conclude that general unsecured creditors may include postpetition attorneys’ fees as part of their claim when attorneys’ fees are permitted by contract or applicable state law.11

Although courts are generally reluctant to equitably subordinate claims of non-insiders, the United States Bankruptcy Court for the District of Montana recently did just that to the claims of a non-insider lender based on overreaching and self-serving conduct in Credit Suisse v. Official Committee of Unsecured Creditors (In Re Yellowstone Mt. Club, LLC), Case No. 08-61570-11, Adv. No. 09-00014 (Bankr. D. Mont. May 13, 2009).