Insolvent SMEs may be able to write down tax debts in ‘examinership lite’
Minister says business community will be happy with proposals in front of Cabinet
Revenue is a priority creditor under insolvency law
A Government Minister has suggested it will be possible for taxes owed by struggling small businesses to be written down in new “examinership-lite” proposals that could be enacted before the summer.
Robert Troy, Minister of State at the Department of Enterprise, says he will bring proposals to Cabinet next week for a so-called “summary rescue” process for SMEs. This would allow insolvent SMEs to restructure debts using a fast-track administrative process, without the huge expense of going to court, which makes the current examinership system too costly for many SMEs.
Revenue is a priority creditor under insolvency law and gets paid ahead of most other creditors when a business goes bust, although in practice judges often sanction tax write-down deals in a full court-administered examinership.
At an online briefing on Friday afternoon hosted by Isme, a lobby group for small and medium-sized enterprises, Mr Troy was asked by solicitor Barry Lyons if Revenue debts would be included in the new low-cost scheme. It is understood that Revenue has raised concerns behind the scenes about State taxes potentially being written down under the examinership-lite process.
Mr Lyons has previously advocated on behalf of Isme for tax write-downs in examinership-lite. Mr Troy responded to him by saying that the solicitor and the SME community “will be happy” with his proposals regarding Revenue debts.
“I am sympathetic to Barry Lyons’s view,” said the Minister. He emphasised that it would be a decision for Cabinet. “But businesses will be happy with what we present before Cabinet.”
When asked afterwards to confirm that this meant the taxes of struggling SMEs would be written down in examinership lite, a spokeswoman for Mr Troy said she was unable to comment ahead of the Government’s consideration of the proposals next week.
Mr Troy said he hoped a Bill for the summary rescue system would be enacted into law “before the summer recess”.
Revenue said it had not made any representations to Government on the matter, although it is represented on the Company Law Review Group.
It said the group’s report to Government “highlights that further consideration is required on the approach taken to Revenue debts and detailed discussions are ongoing” with the Government.
It said its “preference is to engage positively with viable companies seeking to restructure through any insolvency process, provided there is full engagement and honesty”.
During Isme’s Restart Ireland seminar, Mr Troy also said the Government would provide a roadmap next Friday for the reopening of non-essential retail, the rest of construction, personal services, religious services and the hospitality sector. He suggested hotels and guesthouses might reopen “towards the end of May and into June”.
When asked if the Government was considering adding extra bank holidays later in the year to help stimulate domestic tourism, he said the idea had been “knocked about” but he wasn’t sure how “seriously” it had been considered.
“I’ll pass it on to the powers that be,” he said. “The domestic economy will need stimulation.”
In a discussion chaired by Isme chief executive Neil McDonnell, the Minister also acknowledged the State’s €2 billion credit guarantee scheme was “not working as originally intended”, as evidenced by a low take-up. He accepted the scheme needed an overhaul.