by Ken Casey , Jeremy Erwin, Joe O'Malley, Matthew Austin May-16-2022 in Litigation & Dispute Resolution, Commercial & Business, Corporate, Insolvency & Restructuring

Companies (Miscellaneous Provisions) (Covid-19) Act 2020

The Department of Enterprise, Trade and Employment has announced that the Companies (Miscellaneous Provisions) (Covid-19) Act 2020 (the “Act”)1 has been extended to 31 December 2022 following recent approval by the Government.2

The Act was introduced in 2020 and temporarily amends the Companies Act 2014 to assist businesses in dealing with issues arising out of the COVID-19 pandemic, including company solvency issues. The measures apply during an “interim period” which has already been extended several times and was due to expire on 30 April 2022. 

The following key changes to the Companies Act 2014 will continue to be applicable until 31 December 2022:

  • Meetings: general meetings and creditors’ meetings may be conducted wholly or partially using electronic communications technology (virtually).
  • Execution of Documents: documents which are required to be executed under company seal may have the company seal and each of the required signatures appear on separate documents (referred to as ‘counterparts’) and be considered as one single document.
  • Examinership: the period of protection from creditors remains extendable from 100 up to 150 days if the court is satisfied that exceptional circumstances exist. “Exceptional circumstances” are defined in the Act and include, but are not limited to, the nature and impact of COVID-19 on the company. 
  • Winding Up: winding up debt thresholds for individual and aggregate debts is increased from €10,000/€20,000 to €50,000.

Minister of State for Trade Promotion, Company Regulation and Digital Robert Troy anticipates that this will be the final extension of these temporary measures. The Minister also announced that work is continuing to put virtual AGMs and general meetings on a permanent statutory footing. Doing so and giving companies the legal basis to hold general meetings virtually, without the need for including such provision in the companies’ constitutions, would be extremely useful and would provide greater flexibility for companies and shareholders.

The extension of these provisions is welcome, particularly by businesses in certain sectors such as tourism and hospitality and retail, which are still in the process of recovering from the impact of the COVID-19 pandemic.

See our previous article on the matter here.  

Corporate Restructuring - Options for Companies  

In light of the Government’s announcement of the extension of the “interim provisions” including the solvency related provisions, we consider below some of the restructuring options currently available to companies.

Companies continue to face solvency challenges in a post COVID-19 pandemic environment despite the recent recovery and economic growth. Price inflation and higher energy costs are now some of the key challenges for businesses attempting to recover to pre-pandemic levels of trading and repay debt arising out of the pandemic. 

Where there is a risk of insolvency (when a company is unable to pay its debts as they fall due), directors are obliged to actively keep the company’s financial position under review and should monitor and ensure that a business only continues to trade and incur debt in circumstances where it has a reasonable prospect for survival and repaying such debts. 

Outlined below are some of the corporate restructuring options available to companies in circumstances where a company is experiencing trading issues or under pressure from creditors. 

Consensual Restructuring

It may be possible for a company to agree voluntary arrangements with its creditors by way of negotiation if both the company and the creditor can come up with a mutually agreeable solution. This is an out of court debt restructuring process which can include a renegotiation of debt terms and/or an agreement to prevent creditors’ enforcement action. It is an attractive method of dealing with debts due to its low cost and confidential nature. It may result in debts being repaid in full while the directors/shareholders still remain in control of the business.

However, as there is no statutory regime governing this process, it can be difficult to secure agreement with disgruntled creditors. Where agreement is possible, the parties will dictate the terms of any revised agreements. Where there are multiple creditors involved, some creditors may hold off on making an agreement until the outcome of negotiations with other creditors is known.  If engaging in negotiations with creditors, the company and its directors should consider the directors’ duties and the requirement to act fairly and evenly with creditors of the company where it is potentially insolvent.

Statutory Scheme of Arrangement (Part 9)

The Companies Act 2014 provides for Schemes of Arrangement,3 a statutory mechanism for a company to reach agreement with its creditors in relation to the restructure of debt obligations. It may also be used to reach agreement with shareholders to reorganise the share capital of the company. 

The outcome is that the company and its creditors reach a binding agreement to pay back all, or part of its debts over an agreed timeline. A Scheme of Arrangement provides a useful mechanism for companies to continue trading while directors stay in control of the company and allow the company to write down debts and avoid liquidation.

A Scheme of Arrangement may be an option for companies with large debts; companies undergoing trading difficulties; companies under pressure from creditors; companies needing to restructure; and companies aiming to avoid liquidation. 

It is possible to invoke the protection of the court for the proposal of a Scheme of Arrangement and, similar to examinership, the court protection will safeguard the company from action by its creditors during the protection period. Where the company is solvent, creditors worth 75% in value and more than 50% in number must vote in favour of the proposal. The company need not be insolvent to invoke the process and the procedures differ somewhat if the company is insolvent.

Small Companies Administrative Rescue Process (“SCARP”)

The Companies (Rescue Process for Small and Micro Companies) Act 2021 came into effect on 7 December 2021 and inserted a new Part 10A into the Companies Act 2014 to provide for an administrative rescue process for small and micro companies (“SCARP”).

SCARP is a restructuring process for small and micro companies who are unable or likely to be unable to pay their debts as they fall due. SCARP allows a company to restructure its balance sheet and write off a portion of its debts. It aims to be a more cost-efficient and simplified alternative to examinership.  One of the key benefits of SCARP is the limited court involvement. The timeframe of SCARP is 70 days, as opposed to 100 days (or 150 until 31 December 2022) for examinership.

In order to be eligible for the SCARP process, the company must not have used the examinership process or SCARP in the previous five years, must not be in liquidation, and must meet two or more of the following three criteria: -

  1. Turnover of the company does not exceed €12 million;
  2. Balance sheet does not exceed €6 million;
  3. Average number of employees not exceeding 50.


  • The SCARP process is initiated by board resolution unlike examinership which is commenced with a court application. 
  • The company must furnish an insolvency practitioner known as a “Process Advisor” with a sworn statement of affairs for analysis as to whether there is a reasonable prospect of survival of the company.
  • The Process Advisor prepares a report addressing the conditions the company requires in order to continue to trade.
  • The Board of Directors may then pass a resolution appointing the Advisor.
  • The Advisor then has 49 days to prepare a proposed rescue plan for the company to restore the health of the company’s balance sheet. It will most likely involve writing down debts of the company.
  • The rescue plan is approved without the requirement of court intervention provided the majority in value of an impaired class of creditors vote in favour of the proposal and no creditor raises an objection to the plan within the 21-day period which follows the vote.
  • Where there is an objection to the rescue plan, there is an automatic obligation on the company to seek the court’s approval.
  • The process seeks to arrive at a conclusion within 70 days. In some instances that 70 days may be extended further where court applications may be necessary.  

The process will be commenced without the requirement for court approval, and where creditors are engaged in and approve the rescue plan, the court will have limited involvement. The SCARP process allows companies to remain in business while trading through periods of temporary financial difficulty.


Examinership is a court supervised statutory process for restructuring and rescuing companies in financial difficulty.4 The process allows a company to reach an arrangement or compromise with its members or creditors. The aim of the process is to rescue companies where liquidation is a possibility but where there is a reasonable prospect of survival. 

In circumstances where a company is or is likely to be unable to pay its debts and has not been wound up, a petition may be presented to the Circuit Court or High Court seeking the protection of the court and the appointment of an examiner. The petition may be brought by the company itself; the directors; any secured, unsecured, contingent or prospective (including an employee) creditor; or members holding 10% of issued share capital. The court must be satisfied that there is a reasonable prospect of the survival of the company as a going concern before appointing an examiner.

The effect of the court protection is that for up to 100 days, the company’s creditors are prohibited from taking action to enforce any judgments or security against the company. This period of time may be extended by a further 50 days until 31 December 2022, as provided for in the Companies (Miscellaneous Provisions) (Covid-19) Act 2020 outlined above. During the period of court protection, the following actions are prohibited: - no winding up proceedings may be brought; no appointment of a receiver; no steps taken against guarantors; and no attachment, sequestration, distress or execution against property or effects of the company.

The examiner’s role is to design proposals for a scheme to restructure the company and to report to the court on the viability of the company. The proposals are voted on by the shareholders and creditors and approved by the court. If the court approves the proposals, it fixes a date for the implementation of the proposals which will not be later than 21 days from the date of its confirmation. If the proposals are not approved by the court, it may make an order as it deems appropriate, in most cases an order for the winding up of the company.

The process has proven a successful mechanism to secure corporate survival but it is important to note that it will almost always significantly write down the debt owed to a large proportion of creditors and result in change to the ownership and control of the corporate entity concerned.


It is anticipated that there will be a large increase in insolvencies over the next year following the smaller volumes that occurred during the Covid-19 pandemic. As the Government withdraws Covid-19 supports for businesses in the coming months, this will likely lead to liquidity challenges and issues with creditors for some companies. Companies should continually evaluate their current position taking into consideration their key stakeholders including creditors, Revenue and employees and if necessary, consider the most appropriate restructuring option in order to continue to trade and avoid insolvency.  

If you’d like to discuss how any of the measures discussed above could assist your business feel free to contact any of our partners listed or your usual Hayes contact. Joe O'Malley; Ken Casey; Matthew Austin; Jeremy Erwin

2 S.I. No. 220/2022 - Companies Act 2014 (Section 12A(1)) (Covid-19) Order 2022 (
3 Part 9, Section 450 of the Companies Act 2014.
4 Examinership is governed by Part 10 of the Companies Act 2014 (Sections 508 – 558).

Related Articles

  • Companies (Miscellaneous Provisions) (COVID-19) Act 2020 – Key Changes to Company Law – link
  • Corporate Governance and COVID 19 – Practical Implications to Consider – link
  • Companies (Rescue Process for Small and Micro Companies) Act 2021 - Now in Effect – link
  • Small Company Rescue Proposals Published by Government – link

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