Article published in Business Plus on April 2022.

Activity

Trading overall has been good, with an increase in clients, especially in the film industry. This has significantly increased our client base as regards taxation advice etc. The film industry really boomed in Ireland over the past two years as it was not affected by the Covid trading restrictions.

The level of voluntary liquidations decreased, but there was a remarkable surge in Members Voluntary Liquidations. An MVL is where the directors of a solvent company decide to wind up the company for reasons of retirement or are just deciding not to continue trading.

Outlook

Now that Covid restrictions have been completely lifted, businesses should be bouncing back. However, tough times may be looming for companies that were dependent on government subsidies. In addition, debt warehousing helped companies to provide essential cashflow. In December 2021, 105,000 companies were availing of the scheme. Most companies warehousing their tax debt are small and have used the money to support their cashflow. But what happens when the warehoused tax liability must be discharged?

Some businesses with accumulated debt as well as availing of tax warehousing have unrepairable balance sheets and will be left with no option but to call it a day and cease trading. For other firms with less debt and are reasonably solvent, and are in a position to repair their balance sheet, the Summary Rescue Process (SRP) is a simple solution.

Introduced last December, the SRP is fast-track rescue package. The average cost of an SRP would be c.€10,000, compared with c.€100,000 for the slow and cumbersome examinership process. The company can hire an insolvency practitioner who will assess its financial state, draw up a rescue plan and present it to creditors within 49 days of his or her appointment.

If correctly implemented, it will have a very positive impact, and as such will become a very important insolvency tool in the future.