365 jobs have so far been secured as a result of 16 small businesses availing of the expedited restructuring process for viable small firms which need to be rescued financially, according to an analysis by the business advisory firm, Baker Tilly.
The Small Company Administrative Rescue Process – known as SCARP – came into operation at the end of 2021 with the aim of facilitating a simplified out-of-court debt restructuring for small businesses deemed to be viable.
The scheme was introduced as a cost-effective alternative to the examinership process which, due to its expense, is often out of the reach of small and micro-firms.
According to Baker Tilly, the number of small businesses availing of the process grew steadily throughout the year.
Last week alone, 23 jobs were secured in six companies across Ireland as they availed of the rescue process for small and micro companies, its figures show.
“This represents the largest number of companies exiting the new restructuring process within one week since its introduction,” Baker Tilly said.
23 SCARP cases have been undertaken in the state to date, the company said, of which it has acted as advisers in around a dozen.
Under the process, an adviser is appointed to prepare a rescue plan and to work with creditors to consolidate company debts.
“The introduction of the SCARP process over a year ago was a really timely intervention by the State for hard-pressed small business owners grappling with solvency issues in the wake of the pandemic,” Dessie Morrow, Corporate Restructuring Director at Baker Tilly said.
“Obviously, the Government supports were of assistance but very often businesses continued to accrue interest on debt, rent arrears and struggled to pay down legacy debts. Its introduction also addressed the absence of a cost-effective restructuring process for certain small or micro businesses,” he explained.
Mr Morrow said it was imperative to make more firms aware of the cost-effective restructuring option as a means to survive in challenging environment.
“With growing wage costs, high inflation and rising interest levels, small Irish businesses face a challenging and rapidly evolving environment that will reduce their operating margins,” he said.
“Although in its infancy, SCARP can be an important lifeline for many small businesses across Ireland,” he concluded.