ISME welcomes the publication this morning of the Plan for Economic Recovery by the Banking and Payments Federation of Ireland (BPFI). This plan echoes calls from ISME, and others, for an immediate and aggressive plan to provide liquidity for Irish SMEs.
According to ISME’s latest COVID-19 research, most small businesses have now experienced six weeks with little or no trading. Without a rapid and adequate injection of capital, many of these businesses, which are core to the maintenance of Ireland’s Exchequer base, will not survive.
Speaking about the liquidity crisis facing SMEs, ISME CEO Neil McDonnell said;
‘Thousands of Irish businesses have been starved of cash for almost two months due to COVID-19. The vast majority of these are viable, profitable businesses, which have simply been prevented from trading. These SMEs are risk and debt averse, and therefore putting more debt onto their balance sheets is not a solution to their liquidity problem’
The BPFI also acknowledges the ISME plan for an administrative insolvency regime, and states in relation to our proposal that they; ‘are broadly supportive of such a proposal which could be implemented to assist the long-term survival of viable businesses post the COVID-19 crisis.’
The fact that a federation representing creditors understands that ISME’s proposal does not diminish their rights, is most significant.
Barry Lyons, solicitor, said:
‘I am pleased the Banking and Payments Federation, who are the representative body for lenders impacted on by insolvent companies, are in favour of ISME and my proposals to reform the rules on examinership to make them less cumbersome.
I note they are also in favour of directing some State funding, via non-bank lenders recognising the efficiency of that distribution channel’
Ireland has a well-developed examinership regime, to give viable businesses a chance to trade trough trading difficulties. But the current regime is too expensive and too slow for SMEs to avail of.
ISME has proposed procedural amendments to our examinership system that would make it more affordable for SMEs. ISMEs proposal is available here.
ISME are urging the Oireachtas to prioritise this legislation in order to allow as many SMEs as possible to avail of examinership protections.