The new small business rescue regime – Small Company Administrative Rescue Process (Scarp) – has delivered a strong success ratio in terms of keeping businesses alive, according to Baker Tilly which has acted as adviser to more than half of the 23 applications to date.
Established in December 2021, it is designed to facilitate simplified out-of-court debt restructuring for small businesses deemed to be viable at a lower cost and less bureaucracy than the more familiar examinership scheme.
Under Scarp, a “process adviser” is appointed to prepare a rescue plan and to work with creditors to consolidate company debts. Baker Tilly has acted as adviser in 13 out of the 23 cases undertaken in the State to date.
In 10 of these, rescue plans have been approved and one is subject to an objection even though the creditors have approved the rescue plan. A twelfth process has only just commenced.
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Baker Tilly said some 16 viable small businesses and 356 jobs had been saved overall via Scarp in 2022, its first full year in operation.
Six companies Baker Tilly was advising and 23 jobs were saved by the process in the last week alone – the busiest week for Scarp exits since its introduction, according to the business advisory firm.
Among the six companies to have exited Scarp last week were three companies behind the Entertainment.ie platform, including Sortridge Limited, Entertainment Media Networks Limited and Castleforbes Investments Limited.
Digital marketing company Socio Local Limited, online jewellery retailer Lilywho Limited and Dublin-based mechanical services and tyre sales provider Total Tyres & Accessories Limited also completed the rescue process last week.
“The jobs saved through the Scarp process over the past week are important as the people involved can remain in employment in local indigenous companies that are contributing to the economy and local communities,” said Baker Tilly corporate restructuring director Dessie Morrow.
“In a period of rising costs and economic uncertainty, it is encouraging for small businesses to know that there is a process available to them if they find themselves in financial difficulty,” he said.
Baker Tilly said its experience shows a Scarp success rate of over 91 per cent and the process was now readily recognised as an important useful restructuring tool in the armoury of business owners who may be encountering financial difficulty.
