When a company gets into financial difficulty, regardless of the cause, rapid decisions must be made to mitigate the effects. These decisions go beyond simple day-to-day business management. Help is at hand for business owners.
Companies in Ireland are regulated by the Companies Acts 1963 - 2012, which govern a wide range of issues involved in running a business including matters related to companies in difficulty and winding-up of a firm.
Specifically, the Companies Act of 1990 looks at procedures involved in insolvency and winding-up of a company, among other provisions.
The Companies Amendment Act of 1990 and the Companies Amendment (No. 2) Act of 1999 cover examinership. Examinership is a process where a court-appointed examiner will assess a company in difficulty to see if the business is still viable.
During the period of examinership the company and its assets are court-protected. The period of examinership is initially 70 days, which period may be extended by application to the High Court.
The termination of employment contracts can raise a number of legal issues depending on the context of the termination, such as dismissal, redundancy or insolvency.
Stabilising a business
EU regulations allow businesses to claim interest if payment for commercial transactions is late. This applies equally to the public and private sectors. The Regulations do not apply to claims for interest of less than €5, transactions with consumers or debts that are subject to other laws, e.g. insolvency proceedings.
Access to different sources of finance can help overcome financial difficulties.
When filing for bankruptcy is the only option left for a business owner, it pays to cut your losses, initiate proceedings sooner rather than later, and move on to a new project.
Deferment of payment
Where companies are experiencing difficulties with payment of tax or Pay-related Social Insurance (PRSI), they should contact the Revenue service.
If your company is in difficulty you may decide to re-organise the company or dispose of the assets of the business on a voluntary basis in order to stabilise the firm's finances.
Changes to a company's type, name, address or Director/Secretary details are submitted to the CompaniesRegistration Office (CRO).
A number of CRO forms can be filed electronically.
Re-organisation/disposal of assets may also be undertaken under the examinership process. Under this process, the examiner assesses if a business is viable and draws up a plan (which must also be voted on by the creditors and shareholders) to allow it to continue to trade.
This "scheme of arrangement" is then subject to approval by the High Court.
You must give employees notice dependent on the length of the employee's service. If you do not require the employee to work out any part of their notice, you are obliged to pay the employee for that period.
The Department for Jobs Enterprise, - and Innovation (DJEI) has some information on its website on how to deal with debt and credit management. This includes the importance of specifying terms and conditions of sale to customers, setting out and operating credit limits and pursuing overdue payments.
Business Access to State Information and Services (BASIS) delivers government information and services to businesses online. The information is structured around the lifecycle of a business, such as starting up and employing staff.
The Small Firms Association (SFA) in Ireland, the Irish Small and Medium Enterprises Association (ISME) all provide information on management of and how to improve business finances.
Many advisory and funding opportunities are available for businesses from government agencies. The assistance is often in the form of grants, but may also include advice, subsidies, workspace, etc. Government agencies such as Enterprise Ireland and the County and City Enterprise Boards provide grants and other assistance to business owners creating and developing business in Ireland.
Many sources of support and advice are available from the Irish government and the EU. Various financial services from the European Investment Bank and the European Investment Fund are also available for businesses.
Various R&D programmes provide financial and specialist support to companies wishing to develop their capabilities. There are also a number of initiatives to encourage R&D investment by companies.