Certain amendments to the reckless trading provisions of section 610 of the Companies Act 2014 contained in the Employment (Collective Redundancies and Miscellaneous Provisions) and Companies (Amendment) Act 2024Opens in new window (the “Act”) came into force on 1 July 2024 (pursuant to S.I. 303 of 2024).
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.
ACT WHICH ENHANCES PROTECTION FOR EMPLOYEES AFFECTED BY INSOLVENCY NOW LAW
The Employment (Collective Redundancies and Miscellaneous Provisions) and Companies (Amendment) Act 2024Opens in new window (the “Act”) was signed into law by the President on 9 May 2024 and will commence with effect from 1 July 2024.
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.
On 1 July 2024, the Employment (Collective Redundancies and Miscellaneous Provisions) and Companies (Amendment) Act 2024 was commenced in full and is now law.
The Employment (Collective Redundancies and Miscellaneous Provisions) and Companies (Amendment) Act 2024 has been commenced with effect from 1 July 2024.
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 Employment (Collective Redundancies and Miscellaneous Provisions) and Companies (Amendment) Act 2024 (the Act) provides enhanced protections for employees in insolvency situations.
Responsible Person
The Employment (Collective Redundancies and Miscellaneous Provisions) and Companies (Amendment) Act 2024 (Act) has been signed into law but awaits a commencement order to bring it into operation.
In summary, the Act amends the Companies Act 2014 (Companies Act) by modifying the attribution test for related companies to contribute to the debts of the company being wound up, broadening the operative time for unfair preferences, and varying the test for reckless trading.
1. Related company contribution