Introduction
by Paul O'Connell

Welcome to the Summer edition of our newsletter.

The first 6 months of 2022 seem to have flown by, with so much happening both nationally and internationally.

Undoubtedly, the big news story of the year so far has been the war in Ukraine and the resulting impact on the economy through supply issues and inflationary pressures, neither of which show any signs of easing.

Irish businesses are being impacted in so many ways, with supply issues, rising costs and labour shortages high on our discussion agenda with clients. Business owners have been forced to react swiftly and decisively to tackle these issues and it has been encouraging to see so many of our clients embrace the need for change.

Quintas has been no different and I am delighted to say that we have increased our team by 20% over the last number of months in order to keep up with demand for our services. It has been lovely to see new faces coming on board, each bringing a different personality and skillset.

We recently gathered the team together away from the office for a values workshop and will be launching our chosen values in the coming weeks so keep an eye out for same.

We have some interesting news pieces for you in this edition of our newsletter, including the launch of our brand video which you can click on below.

We continue to publish topics of interest on our LinkedIn page on a weekly basis and would welcome anybody who isn’t already following us to do so by clicking here.

Finally, I hope you all get to enjoy some time off over the summer months. Here’s hoping that the weather will improve.

Paul

SCARP Update – Fail to Prepare, Prepare to Fail.

This quote by the great Roy Keane is very much overused at times but it is truly relevant for any business owner who has managed to successfully steer their company through the pandemic over the last couple of years and who are now looking forward to the future.

The annual statistics from the CRO (Companies Registration Office) clearly show that when it comes to companies in Ireland, either the business succeeds, or it fails and when a company runs into trouble inevitably it ends up going into liquidation.

The government in the last number of years has tried to simplify the company rescue process by making it easier and cheaper to save a company when it runs into trouble.

The latest legislative change is called the Small Company Administrative Rescue Process or SCARP for short.

Based on research conducted by the state, this legislation would be applicable to 98% of the SME’s (Small and Medium Enterprises) operating as limited companies in Ireland.

In simple terms SCARP allows a company that has run into trouble to seek protection from its creditors under the legislation to see if it can restructure or write off some of its unsustainable debts. One of the main tests of SCARP would be that it can be clearly seen that the proposal put forward by the Insolvency Practitioner (IP) would provide a better return to creditors than if the company went into liquidation. To succeed any proposal would have to receive the support of the majority of its creditors.

The facilitator of the arrangement is called a Process Advisor (PA). It is important to note that only certain individuals are qualified to act as an PA. As with any restructuring proposal it is important to chose wisely when appointing an Insolvency Practitioner as you only get one chance to put forward a proposal to restructure a company’s debts under SCARP.

I am glad to say that the first SCARP case was recently approved by a majority of creditors for a hospitality business in Kerry. In this case it received the support of its Secured Creditors, Preferential Creditors (who were mainly revenue) and unsecured creditors (revenue, overdraft facility, credit cards, key supplies etc). The write offs in the arrangement of the Preferential and Unsecured debts were substantial.

The additional benefit to this arrangement was that it saved 20 jobs and indirectly it also ensured the future viability of several local suppliers.

Although it was not relevant in this case the legislation allows a company to rescind or amend a lease with a landlord. The process involved with existing lease agreements under SCARP is quite complex and landlord rights are well protected under the new SCARP legislation.

Given the number of companies that have availed of the Debt Warehousing scheme it is critical that a company would take some time now to put together a  3/5 year business plan. This would include clear and realistic cashflows which are stress tested for unforeseen circumstances. In my experience most business plans are overly optimistic, and they need to have clear markers and targets that must be achieved over the course of the 3-to-5-year business plan.

As with bankruptcy arrangements (in personal insolvency), liquidations need to be seen as a destination of last resort. They must only be considered when every other option has been exhausted.

I am hopeful that with this new legislation the insolvency community will be able to rescue more companies, protect jobs and livelihoods. I would also hope that in a couple of years from now that the statistics will show that SCARP arrangements will far outweigh liquidations.

If you feel that you maybe in need of advice, I would always suggest that early intervention is critical for the chances of success in this type of work.

As Roy would say fail to prepare, prepare to fail.

Regards,

Mark

Quintas Partners with All Real for EIIS

Quintas is delighted to be partnering with Niall Harty & Ross McDowell of All Real Nutrition in offering an EIIS investment opportunity. This is your chance to become part of an exciting and pioneering Irish nutrition brand which focuses on sustainability and locally sourced ingredients.

All Real is a brand which is surging in popularity and can now be seen on the shelves of Tesco, SuperValu, Spar, Mace, Londis, Centra and Aldi. All Real protein bars have grown to be the second most popular health bar in the Irish market.  This is truly an exciting opportunity to support an Irish business aiming to conquer the US having recently won their first listing in a high-end US retailer.

EIIS investments offer a 40% tax refund in the year after investment. The investment will carry a 5% annual coupon (20% in total) for a period of 4 years. For example, a €25k investment now, would result in a €10k tax refund in 2023. At the end of the 4-year period, the investor should receive a return of €30k (i.e. €25k capital + €5k coupon).

Ross McDowell (co-founder), All Real Nutrition “We are delighted to be partnering with Quintas for this fund raise. All Real Nutrition is in a really exciting place; we have experienced really strong growth since launching and have some big plans for the future. We have an experienced management team with MJ Kearney (former Global Finance Director, Kerry Group) , Áine Collins (Chairperson of CPA Ireland) and Martin Hoban (Food Service & Forecourt Entrepreneur) on our board of directors. We also recently agreed a large fund raising round from our lead investor Martin Hoban”

Dave O’Brien, Tax Partner Quintas “Most of the competitors of All Real manufacture their products outside of Ireland. When we met the guys in Farranfore we were blown away by the facility they have down there, all bars are made locally with local ingredients, even if it is in Kerry!! All Real Nutrition and Quintas share a similar ethos based on sustainability, quality and supporting local, which is why we are only delighted to partner with the All Real Nutrition brand”.

To find out more about how you can get involved contact Kevin Canning or Dave O’Brien for full details and to get access to the investment memorandum.

Dave O'Brien - dave.obrien@quintas.ie

Kevin Canning - kevin.canning@quintas.ie

Please note that minimum investment is €25k