206 jobs saved so far this year through SCARP

206 jobs have been saved so far this year as a result of the SCARP rescue process for small and micro companies, new data shows.

The Small Company Administrative Rescue Process (SCARP) aims to facilitate simplified out-of-court debt restructuring for small businesses deemed to be viable.

A process adviser is appointed under the scheme to prepare a rescue plan and to work with creditors to consolidate company debts.

The Azets SCARP Index released today reveals a significant fall in the number of firms using SCARP so far this year.

13 SCARPs commenced in the first six months of the year, down 28% on the same period in 2023.

In total 68 small businesses have undertaken the SCARP process since it was set up in December 2021, with 33 of these took place in 2023.

“On one reading, the low level of uptake (so far this year) appears to indicate that the immediate storm of financial pressures facing small businesses has abated somewhat,” said Dessie Morrow, Advisory and Restructuring Partner at Azets Ireland.

“Revenue’s phased approach to repaying warehoused tax debt, the supports provided by Government to small business and a growing economy are working together to support the resilience of Ireland’s SMEs.

“However, many of the issues which businesses faced amidst the inflationary pressures in 2023 look set to continue across many sectors in the medium term, most notably in the hospitality sector which has been particularly hard hit,” he added.

According to the research conducted by Azets Ireland, the hospitality sector accounts for the greatest number of SCARP cases this year, followed by the logistics and construction sectors.

Azets Ireland’s restructuring experts acted as advisers in 25 out of the 68 cases since the scheme launched in December 2021.

These included Ann’s Bakery, a Dublin restaurant with a long trading history on Mary Street, Showtime Analytics, a data analytics specialist, and Ecogas Limited, a retail and distribution gas business based in Co Louth.

Mr Morrow of Azets Ireland said awareness of SCARP still remains too low among many small business owners.

“SCARP is an important restructuring option that can provide businesses with the necessary flexibility to come up with pragmatic solutions to financial difficulties and protect and secure valuable jobs in indigenous Irish companies,” he said.

“Given more than 12,500 Irish businesses are currently undertaking phased payment arrangements with Revenue on around €1.65 billion of warehoused tax debt, a greater number of small businesses may need to restructure in the months ahead as the viability of those repayment plans has not yet been fully road-tested,” he added.

The research also reveals the that more than 360 jobs have been saved due to examinership cases over the past six months.

Freshly Chopped, the operator of five healthy fast-food outlets in Dublin, was among the firms to have most recently restructured its affairs through an examinership process last month.