New laws aimed at making it quicker, simpler and cheaper for small businesses in financial difficulty to restructure have been passed by the Oireachtas.

It is now expected that the Small Company Administrative Rescue Process or SCARP will be signed into law by the President in the coming days.

The dedicated rescue framework for small and medium sized enterprises mirrors elements of the existing examinership process.

These include repudiation of onerous contracts and encouragement of ongoing creditor engagement.

The laws will also allow the process to be commenced by a resolution of directors rather than by application to the courts.

The company will then appoint an insolvency practitioner who will prepare a rescue plan which must satisfy the 'best interest of creditors' test and provide each creditor with a better outcome than a liquidation.

No creditor may also be unfairly prejudiced by the plan and they will all be invited to vote on it by day 49 of the insolvency practitioner’s appointment.

The plan can be approved without the involvement of a court once 60% in number representing the majority in value of claims of an impaired class of creditors vote in favour of the proposal.

No creditor must also raises an objection to the plan within the 21-day cooling off period which follows the vote.

"This Bill is the culmination of a year-long effort to ensure that we have in place the necessary legal framework to help viable companies stay in business as we emerge from the pandemic," said the Minister for Trade Promotion, Digital and Company Regulation, Robert Troy.

"The Bill provides for a streamlined, workable and practical process to allow these companies restructure and continue to trade."

"It is built on a tried and tested framework, examinership, and with the benefit of input from business, trade unions, insolvency practitioners and legal practitioners."

The Small Firms’ Association said the passing of the bill is good news for small businesses who find themselves in distress.

"It is vital now that the bill is enacted at the earliest opportunity, to allow small businesses who need it to avail of its provisions," said its director, Sven Spollen Behrens.