Some 561 jobs have been saved since the introduction of a new small business rescue regime – Small Company Administrative Rescue Process (Scarp) – two years ago, according to Azets Ireland.
The audit and advisory firm, which was previously Baker Tilly Ireland, said there had been a “marked increase in demand” for Scarp in 2023 to date and it expected this to continue into 2024.
Aimed at small and micro companies, 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 first Scarp index compiled by Azets has found that 50 small businesses have undertaken the Scarp process since its creation in December 2021, with 22 firms going through the process in 2022 and 28 starting so far this year.
The retail, hospitality, construction and advertising sectors have accounted for half of all Scarp cases to date. Among the businesses to have successfully exited Scarp with the support of advisers from Azets were Linen Bundle Europe, Airmid Health Group and the restaurants China Sichuan in Sandyford, Brasserie Sixty6 and Rustic Stone.
Azets have acted as advisers in 19 of the 50 cases, with rescue plans approved for 16 – a success rate of more than 84 per cent, it said.
“Scarp is needed now more than ever. In a time of lingering inflation, rising wages, higher interest rates and a slowing economy, many Irish small businesses are facing an extremely challenging environment. The retail and hospitality sectors are more exposed to these headwinds and are most likely to see a reduction in their already tight operating margins,” said Azets Ireland corporate recovery partner Dessie Morrow.
“With over 60,000 Irish businesses faced with having to pay back Revenue close to €2 billion in warehoused debt in May next year, an increasing number of small businesses may need to restructure. Scarp is a vital tool in the armoury of small business owners who may encounter financial difficulty in the months to come.”
