Debt restructuring changes for firms

New legislation proposed by the Government is set to make it easier for small businesses to restructure their debts.

Minister for Jobs, Enterprise and Innovation Richard Bruton said he planned to amend the Companies Act to allow small private companies to apply to the Circuit Court directly to have an examiner appointed.

The move is intended to make it cheaper and easier for companies in difficulty to resolve their debt problems.

Small firms are classed as those with less than 50 employees, with a balance sheet not exceeding €4.4 million or turnover of less than €8.8 million. To qualify for the new measures, firms must satisfy two of the three conditions.

The changes will be made in the upcoming Companies Bill, which is to be published before the end of the year. It is expected to be enacted by the Oireachtas soon after its publication.

Mr Bruton said the Government recognised that there are many viable small enterprises in the sector that employed large numbers of people and had the potential to employ many more, but were facing “significant difficulties” because of legacy debts.

“That is why we committed to putting in place better structures to enable these businesses to more easily restructure their debts, while giving proper consideration to other businesses and individuals owed money by them," he said.

“This will mean that more businesses will survive their current difficulties, meaning crucially that more jobs will be saved and more jobs will be created in this hugely important part of the economy.”

Small businesses account for about one third of people in the Irish workforce. In its action plan for jobs, the Government identified a number of areas where the sector could be supported, including new funding sources and a credit guarantee scheme.

Business and credit risk analyst Vision-net said the move should help struggling sectors of the economy to recover faster.

"Legacy debt and the costly, drawn-out examinership process have hindered the recovery of small companies," said managing director Christine Cullen. "By allowing them to apply to the Circuit Court, companies will be able to more affordable restructure their debts, enhancing their chances of recovery and the protection of jobs."