SCARP ( Small Company Administrative Rescue Process)

The Small Company Administrative Rescue Process (SCARP) is an insolvency process created in December 2021, as an alternative to Examinership. It is designed to be resolved outside of court, with a lower cost than Examinership. This process is specifically designed for small and medium sized enterprises (SMEs), which make up 98% of Irish businesses.

In a time period where costs are rising, uncertain economic climate and a spike in corporate failures forecast. Its important for businesses to be aware of this process. SCARP is a lifeline that has proven to save small businesses in moments of financial difficulties, giving them a chance to restructure and build a sustainable business plan. 

To maximize the chances of survival, companies must act swiftly. Waiting too long to begin the SCARP process may result in the inability to save the company from liquidation.

Requirements to qualify for SCARP:

There is three criteria for the rescue process, your company must meet two;

• Company turnover does not exceed €12m
• Total of balance sheet does not exceed €6m
• An employee count not exceeding 50 people

Before beginning the debt restructuring process, the company must seek the guidance of a Process Advisor (PA), who is a qualified insolvency practitioner. The PA will provide an initial report to the Directors, determining the company’s chances of survival before the process formally commences.

To assess the potential for the company’s recovery, the PA will review the following aspects of the business with the Director(s):

• The character and potential of the business
• Accessibility to funding or investment
• Cost structure, including potential cost reductions
• The feasibility of the business plan and projections
• The ability of the business to make payments towards its obligations
• The economic situation and future of the industry market
• The company’s brand, history, and expertise 

SCARP TIMELINE

Rescue plan evidence

To give the plan the best chance of approval the company must:

• have reasonable grounds for survival
• have a fair and equitable plan
• give the creditors a better outcome than liquidation

Should your company be planning for SCARP

If you’re facing financial turbulence or if you believe that you may need scarp there are various steps that if taken, will best prepare your company. The steps you take should be determined by your circumstances. However, here is a few examples:

• surrender leases to landlords
• ensure financial records are up to date
• prepare up to date management accounts
• prepare & file all tax returns
• obtain valuation of assets
• implement redundancy programme
• freeze pay to certain creditors

To summarise, the rescue process offers a quicker, cheaper and out of court alternative to examinership. It is an important process for small businesses to be aware of. Under the stress of financial turbulence SCARP can allow your company to recover and prosper.