Financial difficulty is not the same as failure. Many businesses that go through a period of cash flow crisis or debt pressure - through a difficult trading period, a customer who does not pay, a tax liability that built up unnoticed - come out the other side intact. The businesses that do so are the ones that face the situation honestly, take professional advice early, and use the options that are available to them.
The businesses that end badly are typically the ones that ignored the problem, traded through the difficulty without telling anyone, and arrived at a point of crisis where the options had narrowed to one.
This article covers the range of options available to an Irish business that is finding it difficult to meet its financial obligations - from informal approaches with creditors to formal insolvency processes.
Start Here: Get Honest About the Numbers
Before any decision can be made about the right course of action, you need an accurate picture of the business’s financial position. This means:
A current balance sheet - what the business owns and what it owes. A cash flow projection for the next three to six months - when money comes in and when it goes out. A list of creditors, with amounts and how overdue each debt is. An honest assessment of whether the underlying business is viable - is the problem cash flow and timing, or is the business genuinely loss-making on a structural basis?
Many business owners in financial difficulty are operating without current financial information. They know things are tight but they do not have a clear number. Getting the numbers on paper is the first step, and it often reveals that the position is either better or worse than the owner feared - both of which are useful to know.
Option 1: Negotiate Directly With Creditors
The simplest and cheapest option, when it is available, is direct negotiation with creditors for extended payment terms or a revised payment schedule.
Suppliers and trade creditors will often agree to a structured repayment arrangement for overdue amounts, particularly where the relationship is long-standing and the debtor is communicating openly. A phone call acknowledging the debt and proposing a realistic repayment schedule - “I can pay 500 euro per month against the outstanding balance” - is vastly preferable to silence and missed payments from the creditor’s perspective.
Negotiating directly requires the business to be honest about its position and realistic about what it can commit to. Agreeing a repayment plan and then not keeping to it damages credibility and closes off future negotiation.
Option 2: Revenue Payment Arrangement
Revenue is a creditor of most businesses - for VAT, PAYE, corporation tax, and other tax liabilities. Revenue will enter into phased payment arrangements (PPAs) for businesses that have tax debts but are genuinely trying to resolve them.
A phased payment arrangement involves agreeing with Revenue to repay an outstanding tax liability over a defined period of regular instalments, typically monthly. Interest continues to accrue on the outstanding balance during the arrangement, but the arrangement prevents enforcement action while the agreed payments are being made.
Revenue is more willing to agree PPAs where:
The business has a viable underlying trade and can demonstrate it. The application is made proactively rather than after enforcement action has commenced. The proposal is realistic - Revenue will not agree to payments that are clearly undeliverable. Future tax obligations (ongoing VAT returns, PAYE) are being met as they arise.
Option 3: Bank and Finance Creditor Negotiation
Where a business has bank loans, asset finance, or other finance facility obligations it cannot meet, the bank or finance company should be contacted directly. The Code of Conduct for Business Lending (CCBL) places obligations on Irish banks to engage constructively with businesses in financial difficulty.
Options that banks may consider include: a payment holiday (a defined period where repayments are deferred and added to the loan balance), an interest-only period, an extension of the loan term to reduce monthly repayments, or restructuring of the debt on new terms.
These options require the business to make a case for why its underlying viability justifies restructuring. A clear presentation of the business position, the reason for the difficulty, and a realistic business plan showing how the position will improve is more persuasive than an informal conversation.
Option 4: Examinership
Examinership is a formal court process available to Irish companies that are insolvent (or likely to become insolvent) but have a viable underlying business. Under examinership, the court appoints an examiner - typically an insolvency practitioner - who has 100 days to propose a scheme of arrangement with creditors. If the scheme is approved, debts are restructured and the company survives.
Examinership is available to companies of all sizes since the Companies (Amendment) Act 2024 extended the process to small companies through a simplified procedure. It is not cheap - the examiner’s costs and legal costs are significant - but for a business with genuine viability and a large debt overhang, it can preserve the business and save jobs.
The key test for examinership is that the company must have a reasonable prospect of survival as a going concern if the scheme is approved. A business that is structurally loss-making is not an examinership candidate.
Option 5: Creditors’ Voluntary Liquidation
If the business is not viable - if the losses are structural rather than temporary, or if the debt burden is too large to be resolved through restructuring - an orderly wind-down through a Creditors’ Voluntary Liquidation (CVL) is usually preferable to allowing the company to drift into a disorderly collapse.
In a CVL, the company’s directors resolve to wind up the company and appoint a liquidator. The liquidator realises the company’s assets and distributes the proceeds to creditors in the order prescribed by company law. The process is structured and transparent.
A CVL is preferable to waiting for creditors to petition the court for compulsory winding up - it gives the directors more control over the process and timing, is generally cheaper, and is less damaging to the directors’ subsequent business activities (subject to the provisions around reckless trading described below).
The Director’s Personal Exposure
A critical point for any director of a company in financial difficulty: you must stop trading when you know (or ought to know) that the company has no reasonable prospect of avoiding insolvency. Continuing to incur debts - with suppliers, with employees, with Revenue - when you know the company cannot pay them exposes you to personal liability under the Companies Act 2014 (reckless trading) and potentially to disqualification as a director.
This is not a theoretical risk. The Corporate Enforcement Authority is active, and liquidators routinely review the conduct of directors in the period leading up to a company’s insolvency.
Taking professional advice at the first signs of financial difficulty - not when the crisis has fully arrived - gives you time to act correctly and protects your personal position.
Get Advice Early
The consistent message from everyone who advises on business insolvency in Ireland is the same: the earlier you seek advice, the more options you have. A business that approaches an accountant when debts are three months old has far more options than one that waits until enforcement proceedings have started.
At Malone and Co., we have advised businesses through financial difficulty of all kinds over 35 years. The conversation is confidential and the first consultation is free.
Paddy Malone FCA AITI
Paddy is the principal of Malone & Co. Chartered Accountants in Dundalk. A Fellow of Chartered Accountants Ireland and a Chartered Tax Consultant with the Irish Tax Institute, he has been advising businesses across County Louth and the North-East for over 35 years.