Hayes Solicitors

IntroductionCorporate restructuring refers to the processes by which a financially distressed company can reorganise its debts and business affairs to restore viability, as opposed to winding up. This practice note focuses only on corporate (not personal) restructuring under Irish law, with an emphasis on formal restructuring mechanisms, while also noting informal, non-judicial, approaches. Key formal tools include examinership (a court-supervised rescue process), schemes of arrangement, and the Small Companies Administrative Rescue Process (SCARP) for small and micro companies. These mechanisms operate within the framework of the Companies Act 2014 (Ireland) (CA 2014 (IRL)), and relevant case law.The goal of restructuring is to rescue the business as a going concern or, at least, to preserve its value better than an immediate liquidation would.Key issues for directors’ dutiesDirectors of a distressed Irish company must be mindful that their fiduciary duties, normally owed to the company (and indirectly its shareholders), shift in emphasis once insolvency looms. CA 2014 (IRL), s 224A, explicitly requires directors who believe, or have reasonable cause to believe, that

When an Irish company experiences financial difficulty, directors face complex legal and fiduciary duties. Their obligations extend beyond shareholders to include creditors and enhanced obligations to the company itself. This Practice Note outlines these duties, with a focus on the Companies Act 2014 (Ireland) (as amended), the SI No 380/2022 European Union (Preventive Restructuring) Regulations 2022 (Ireland), case law, and practical considerations.

Examinership is a court-supervised corporate rescue process that places a financially troubled company under the protection of the court to facilitate its survival as a going concern.In an examinership, an independent examiner is appointed by the court to examine the company’s affairs and formulate a scheme of arrangement (a restructuring plan) to return the company to viability.During examinership, the company enjoys a court-protected moratorium that freezes creditor enforcement actions, allowing breathing space for the examiner to seek new investment and to negotiate compromises with creditors.If a suitable arrangement is approved and confirmed by the court, the company can emerge from examinership with a restructured balance sheet. If not, the company will likely face liquidation.Examinership is a ‘debtor in possession’ procedure in that, unlike receivership or liquidation, the existing directors remain in control of day-to-day operations (unless the court orders otherwise), making it an attractive rescue option for directors of insolvent companies.Petition and appointmentStatutory criteriaThe court (High Court, or the Circuit Court if the company qualifies as a ‘small company’)

This Practice Note examines the Small Company Administrative Rescue Process (SCARP), the requirements for a company to avail of it, and the steps which must be taken to complete the process.

ChecklistThis Checklist sets out the steps that must be taken to appoint an examiner. This Checklist should be used in conjunction with the Practice Note: Ireland—Examinership.Step/actionTimingSection/ruleBefore application1Check statutory eligibility:● company is, or is likely to be, unable to pay its debts (cash flow or balance sheet basis)● no resolution has been passed for the winding up of the company, and no winding-up order has been made● reasonable prospect of the survival of the company (or part of its business) as a going concernCA 2014 (IRL), s 5092Check company status, check whether a receiver has been appointed to the company or its assets (or any part thereof).The court will not hear the petition if a receiver has been appointed for a continuous period of at least three days before presentation of the petition.CA 2014 (IRL), s 512(4)3Check forum.Circuit Court jurisdiction applies where the company is a qualifying ‘small company’. A small