Small Companies Administrative Rescue Process
A practical route to rescue and restructuring a financially distressed business
If your company is experiencing financial difficulty but you believe the underlying business is viable, SCARP may provide an opportunity to restructure the company's debts and protect its future.
The Small Companies Administrative Rescue Process (SCARP) is an Irish statutory restructuring process designed specifically for eligible small and micro companies that are, or are likely to become, unable to pay their debts.
SCARP provides a more streamlined alternative to examinership, with a reduced requirement for court involvement. The objective is to give a viable business the opportunity to restructure its liabilities, continue trading and preserve value for its stakeholders.
At Baker Tilly Ireland, our restructuring and recovery specialists can assess whether SCARP is appropriate for your business and, where appropriate, act as Process Advisor.
Is your business under financial pressure?
SCARP may be relevant if your company is experiencing:
- Increasing pressure from creditors or suppliers
- Revenue or other tax liabilities
- Cash-flow difficulties
- Overdue bank or finance obligations
- Rent or lease liabilities that the business can no longer sustain
- Falling margins or profitability
- A requirement for new investment or working capital
- Threats of legal action or enforcement
- A business that is fundamentally viable but carrying an unsustainable level of debt
The key question is not simply whether the company is insolvent today. The important question is whether there is a reasonable prospect that the business can survive if its financial difficulties are addressed.
What can SCARP achieve?
Every restructuring is different, but a successful SCARP may allow a company to:
Restructure debt
An agreed Rescue Plan can address unsustainable liabilities and provide a realistic repayment structure.
Continue trading
The objective is to preserve a viable business rather than immediately move to liquidation.
Protect jobs
Where the underlying business is viable, rescuing the company can help preserve employment.
Provide certainty to creditors
Creditors can receive a structured return under a formal statutory process.
Address onerous commitments
Subject to the statutory requirements, the process can provide mechanisms for dealing with certain contracts and liabilities that are preventing the business from becoming viable.
Avoid liquidation
Where a company has a viable underlying business, SCARP can provide an alternative to simply closing the company and liquidating its assets.
We take a practical approach: understand the business, identify the problem, assess the available options and develop a realistic route forward.
Where SCARP is appropriate, our qualified insolvency professionals can act as Process Advisor and guide the company through the statutory process.
Talk to us early
Financial difficulty does not necessarily mean the end of a business.
If you are a director, shareholder, lender or professional adviser concerned about a company's financial position, early advice can make a significant difference to the options available.
Contact Baker Tilly Ireland to arrange a confidential initial discussion about your circumstances and whether SCARP or another restructuring solution may be appropriate.
Key takeaway
SCARP is designed to give viable small and micro companies facing financial difficulty an opportunity to restructure and survive. The earlier the problem is identified, the greater the opportunity to find a workable solution.
