Latest news with #SmallCompanyAdministrativeRescueProcess
Irish Examiner
07-07-2025
- Business
- Irish Examiner
More than 1,300 jobs saved by SCARP since launch in 2021
Ireland's construction, hospitality and alcohol sectors have benefited the most from the Small Company Administrative Rescue Process (SCARP), with new data from Azets Ireland reporting a 15% rise in the number of firms availing of the scheme in the first six months of 2025. According to the professional services firm, more than 1,300 jobs across a milestone 100 companies have been saved since the rescue business was introduced in December 2021. SCARP aims to facilitate simplified out-of-court debt restructuring for small businesses deemed to be viable. As part of the scheme, a process adviser is appointed to prepare a rescue plan and to work with creditors to consolidate company debts. Some 15 SCARPs have commenced to date in 2025, reflecting an increase of 15% on the same period last year, with some 240 jobs having already been saved in 2025 as a result of successful SCARPs. The hospitality sector accounted for the highest proportion of SCARP cases in the first half of 2025, at 20%. It is followed by the construction (13%) and alcohol producing (13%) sectors, an indicator that uncertainty around trade tariffs may already be impacting the export orientated boutique spirits sector, Azets said. More than half (53%) of businesses availing of the SCARP process have been based in Dublin. 'In a period of heightened economic uncertainty, Ireland's SMEs are navigating challenging trading conditions, from rising costs to elevated energy costs and supply chain issues," said Dessie Morrow, Partner in Advisory and Restructuring at Azets. "In sectors which are heavily export dependent, the unknown position on tariffs and how that might recalibrate the trading relationship has caused considerable uncertainty and a slowdown in key decision making. "This can have a major impact on firms from production slowdowns to pauses in capital expenditure and is particularly challenging for firms already struggling with the high cost of doing business." To enhance engagement with the SCARP process among firms in financial distress, Azets is calling for the existing Revenue opt-out at the start of the process to be removed, which is deterring some businesses to undertake the process. The firm also said that while the short time frame of the process allows a restructure to take effect quickly, there are resource constraints in particular for micro companies where individuals are responsible for a number of areas within the business. This, they say, is a barrier to increased take up. 'By reducing the burden on businesses and enhancing the flexibility of SCARP, we can support the future viability of more small businesses that may need to restructure in the months ahead," said Mr Morrow.
Irish Independent
03-07-2025
- Business
- Irish Independent
Hospitality sector continues to see elevated number of insolvencies during first half of the year, says Deloitte
But services, hospitality and construction were still the hardest hit sectors during that period, bearing the impact of persistently high operating costs. A doubling of the number of court liquidations in the period, to 42, has been attributed to companies being unable to meet phased payment agreements with the Revenue Commissioners as part of the pandemic debt warehousing programme. Revenue was the petitioner to the courts in 27 of the 42 cases. Deloitte said that corporate receiverships rose 37pc in H1, with significant activity by alternative lenders enforcing real estate-backed loans that have defaulted or matured without resolution. The number of firms undergoing formal restructuring via examinership or via the Small Company Administrative Rescue Process (Scarp) has jumped 56pc in the first six months of the year compared to the first half of 2024, however. The Deloitte report shows that the number of receiverships rose 37pc to 71 in the first half of the year. Most of those receiverships were initiated by alternative lenders. The hospitality sector had 66 insolvencies in the first half of the year. That's down 14pc compared to the first six months of 2024, but remains elevated. Hospitality venues that have entered insolvency processes in recent weeks include the company behind Captain Americas on Grafton Street in Dublin, and Dylan McGrath's Fade Street Social, also in the capital. The hospitality sector has the highest number of insolvencies of any industry in Ireland when services are split into subsectors. Restaurants are disproportionately impacted within this sector, due to legacy debt issues, difficulty attracting and retaining staff, and energy costs in Ireland being the most expensive in Europe, noted the report from Deloitte. 'Hospitality continues to experience a high number of insolvencies, despite the drop in 2025 so far,' said James Anderson, turnaround and restructuring manager at Deloitte Ireland. He said the expected reintroduction of a 9pc Vat rate for the sector is unlikely to favourably impact the insolvency rate due to the sector's legacy issues. There were just 14 appointments under Scarp in the first half of 2025, compared to seven in the first six months of 2024. Scarp aims to facilitate simplified out-of-court debt restructuring for viable small companies. But Scarp has not had the kind of traction that might have been expected since it was introduced in 2021. Just 99 appointments have been made under the system since then. 'Scarp has proven to be a successful process that saves companies and jobs,' said Mr Anderson. 'It is disappointing that awareness remains low despite a success rate of over 70pc. It is crucial that an awareness campaign is invested in, so more people are aware of it.' He added: 'Even though insolvency numbers for the year to date are similar to 2024 levels, there are significant headwinds to consider for the rest of the year, with all the ongoing geopolitical and trade tensions.'
Irish Examiner
26-06-2025
- Business
- Irish Examiner
Legal guides to rescue or liquidation
Rising interest rates and patchy post-pandemic demand are driving more Irish companies into difficult territory. When the balance sheet tips, four statutory routes exist: examinership, the Small Company Administrative Rescue Process (SCARP), liquidation and receivership. Each route triggers a different playbook for owners, lenders and employees, yet the boundaries overlap. Choosing well and choosing early decides whether a firm re-emerges or disappears. Shane Harron, partner at Dillon Eustace. Shane Harron, partner, Restructuring, Insolvency and Commercial Litigation, Dillon Eustace, sketches the purpose of examinership: 'Examinership is a rescue mechanism for companies in financial distress that meet certain criteria. It is generally considered to be a successful and flexible process designed to allow companies to continue to survive difficult periods.' Court protection freezes creditor action for up to one hundred days while an independent examiner prepares a scheme of arrangement. Directors stay in charge day-to-day and work with the examiner on investment, cost cuts or debt write-downs. SCARP offers similar breathing space to smaller companies but avoids court hearings. David O'Connor, partner at BDO. 'Smaller companies will often prefer the newer SCARP process, because examinership is quite expensive,' says David O'Connor, partner with BDO, whose team prepares independent expert reports for both processes. The same insolvency practitioner acts from start to finish, which trims fees and shortens timelines. In 2024, thirty businesses used SCARP to restructure, according to EY partner Alan Large. Barbara Galvin, partner with William Fry. At the opposite end sits liquidation. 'Liquidation marks the end of a company's life,' says Barbara Galvin, partner with William Fry. A liquidator takes control, sells assets and distributes the proceeds down a statutory waterfall. Solvent liquidations close in under a year, but insolvent cases, from IBRC to Treasury Holdings, can run for a decade when litigation clogs the pipeline. Receivership is narrower again. Here, the secured lender, not the board, fires the starting gun. 'Receivership differs from examinership and liquidation in that it is a process initiated by a company's creditors to realise a secured debt,' Harron explains. Once the charged assets are sold and the lender repaid, the receiver's mandate ends, sometimes in weeks. Speed and Scope Examinership follows a strict clock: seventy days plus a possible thirty-day extension. During that moratorium, creditors cannot sue, appoint a receiver or seek liquidation. SCARP moves faster because it is out of court; the process adviser must file a rescue plan within forty-two days. Liquidation moves only as quickly as asset sales, creditor claims, and disputes allow. Standard solvent cases average six to nine months, but complex insolvent estates stretch far longer. Receivership aligns with asset disposals and often completes within two years. Control and creditor influence Directors retain operational control in examinership and SCARP, yet they do not dictate outcomes. The examiner or process adviser groups creditors into classes, and a majority in at least one impaired class must vote for the scheme. 'Creditor negotiation forms a crucial part of the process,' Galvin says. Once the court, or in SCARP, the process adviser, confirms the plan, dissenting creditors are bound. In liquidation, directors lose all authority on appointment. They also face forensic scrutiny of decisions taken in the run-up to collapse. Receivership sits between the two: directors may still trade the unencumbered parts of a business if the receiver is appointed over specific assets rather than the entire undertaking. Director liability in the insolvency zone Statute now requires Irish directors to prioritise creditor interests once insolvency is likely. Ignoring warning signs carries a personal cost. 'As soon as a company's directors become aware of its insolvency, they should take all necessary steps to preserve the assets of the company for the benefit of its creditors,' Harron says. Liquidators must report to the Corporate Enforcement Authority and, unless excused, bring restriction proceedings against directors of insolvent firms. Sanctions range from a five-year restriction on acting as a director to full disqualification or personal liability for reckless trading. 'There is no statutory obligation to place an insolvent company into liquidation, but directors should only continue to trade where they believe on reasonable grounds that the company can survive,' Large says. Cost and suitability Examinership's court involvement adds expense. O'Connor sees boards hesitate when legal and advisory fees could top €300,000. 'You need to be of a certain size to justify going into the examinership,' he says, pointing out that smaller firms owe far less and cannot fund the process. SCARP cuts that hurdle because one practitioner fills the dual role of independent expert and process adviser, reducing duplication. Despite the options, uptake among SMEs remains modest. 'The number of SMEs availing of SCARP and examinership is not very high,' Galvin says. She blames a lack of awareness and the stigma that any insolvency procedure equals failure. Large adds that many owners wait too long and erode the working capital needed for a viable rescue. Outcomes in practice History shows rescue can work. The Goodman Group examinership in 1990 restructured wartime debt and protected thousands of jobs in the beef industry. More recently, Big Mike's restaurant in Dublin used SCARP to prune debt and safeguard employment. O'Connor's team provided the independent expert report for a nationwide food chain that entered examinership this month. 'There is a requirement for an independent expert to show that if this company goes into examinership, then there's a high probability it will succeed,' he explains. The court accepted the report and appointed an examiner, opening a path to protect what O'Connor calls 'potentially significant' jobs. Large has watched investors step in after balance-sheet clean-ups. 'The process allows companies to continue with a clean balance sheet and facilitate new investments that are essential for safeguarding their future,' he says. Choosing a path No single test determines which option fits. Harron emphasises early diagnostic work: cash-flow modelling, creditor mapping and covenant reviews. Owners must weigh the probability of survival against liquidity, fixed-charge security and stakeholder appetite for compromise. Galvin underscores timing: examinership and SCARP require enough cash to trade through the protection period. Liquidation or receivership may be unavoidable if working capital has already evaporated. Creditors influence direction, too. A lender can pre-empt examinership by appointing a receiver the moment a covenant is breached. Conversely, a successful examinership can bind secured lenders if the courts are satisfied the scheme treats them fairly. Practical steps before a crisis hits Directors can shrink legal risk long before insolvency lawyers arrive. Harron recommends daily cash monitoring and tight board minutes that show decisions and advice taken. Galvin adds that accurate books and records are the best defence against subsequent restriction applications. Large tells boards to scenario-model each pathway while funds are still available: comparing examinership, SCARP, and liquidation costs clarifies the trade-offs and underpins talks with creditors or investors. O'Connor's experience is blunt. 'Sometimes a solution is, guys, you're at the end of the road, you need to go into liquidation,' he says, warning directors against compounding debt once insolvency is obvious. The bottom line Ireland's corporate insolvency framework offers genuine rescue tools alongside orderly termination routes. Examinership and SCARP can salvage viable enterprises if boards act quickly, secure fresh capital and engage constructively with creditors. Liquidation and receivership close a chapter but still demand disciplined governance to avoid personal fallout. The legal pathway is never chosen in the courtroom; it is chosen months earlier in board meetings where directors either confront the numbers or flinch from them. In a tightening credit cycle, that distinction will decide which Irish businesses live to trade another day and which do not.
Irish Independent
11-05-2025
- Business
- Irish Independent
‘Since January 20, the world has changed' – Distilleries pause production as uncertainty grows amid US tariff tensions
Pat Rigney, who co-founded Drumshanbo Gin-producer The Shed Distillery alongside his wife, Denise, said many of the country's distilleries were going through a tough time with most distilleries temporarily halting production. Pauses were happening across the industry, he added, hitting large and small distilleries alike. 'I think since January 20, the world has changed with the new US administration,' he said. 'That was then but now we are in a different world, a very uncertain world. 'I'm not sure if you are aware, but the vast majority of distilling in Ireland has paused at the moment due to the challenges.' Rigney, who chairs the industry group Drinks Ireland, added that The Shed had not stopped production. On the pauses, Rigney noted there would be downstream effects for others, highlighting that Irish grain growers, pallet manufacturers, and trucking firms could take a hit. While Rigney said he can't answer on behalf of the distilleries pausing production, he believes uncertainty caused by US tariffs brought these actions forward. He also noted 'heightened levels of competition' from other categories, like tequila and cognac, playing a role. Irish alcohol producers are currently subject to a 10pc levy on sales in the US, its largest export market. However, this is due to increase to 20pc should EU and US negotiators fail to strike a trade deal. Last week the European Commission re-tabled proposals to hit US bourbon whiskey sold to EU states with tariffs. Such a move could spark a furious response from Trump leading to greater levies for Irish alcohol firms selling to America. Woes in the whiskey sector have even led to insolvencies. Rigney called for the Government not to take the industry for granted. Several prominent Irish distilleries have reportedly paused or cut back production in recent months. ADVERTISEMENT Learn more In March, Jameson-producer Irish Distillers said it was pausing production at Midleton Distillery in Co Cork from April until summer. The country's largest whiskey business said it was 'adjusting its production schedule for a routine, periodic review'. Bushmills had also reduced production saying it was aligning its 'whiskey stocks with anticipated demand trends.' Last November, Waterford Whiskey entered receivership after failing to raise fresh funding. The receivership was extended in March due to it being a 'challenging' time to find a buyer. In February, Blackwater Distillery entered the Small Company Administrative Rescue Process (Scarp), a rescue mechanism for smaller Irish businesses. A rescue plan was approved last month following a meeting of the company's creditors. The Shed boss Rigney was speaking after the business behind his distillery, PJ Rigney Distillery & International Brands, released results for the year ended September 30, 2024. Profit fell to €2.43m, down almost €870,300. Rigney said this was due to increased investment and heightened costs, which had not been passed on to consumers. The business had sales of over €17.27m and depletions – a measure of the number of cases sold to retailers by a distributor – had increased, he added.
Business Mayor
05-05-2025
- Business
- Business Mayor
Ireland must ease tax burden on start-ups to spur innovation and create jobs
US trade tariffs have exposed again the frailty of our economic model and the outsized impact of a small number of large multinational companies on Ireland's economic future. Already this year, it has been estimated that between 30 and 40 per cent of investments have been delayed. With the increasing geopolitical and economic volatility globally, there is an urgent need to rebalance our economy and ensure that ambitious Irish owner-manager and indigenous businesses can become drivers of overall economic growth. Now is the time for bold decisions that can reset the course of our economy. That starts with recognising the critical role that family-run businesses, high-potential start-ups, and small to mid-sized firms already play. Together, they employ two-thirds of Ireland's workforce and are the beating heart of local economies across the country. Supporting these businesses to scale up means tackling the range of persistent challenges they face – including high operating costs, challenges in deploying automation and AI, limited access to capital, and difficulty attracting skilled talent. Doing so can unlock their full potential and strengthen Ireland's ability to withstand future economic shocks. While discussions about US tariffs dominate, the reality is that these measures may only have a direct adverse impact on a limited number of larger companies. Meanwhile, thousands of SMEs – the true backbone of the Irish economy – continue to grapple with day-to-day pressures and rising costs. [ Hospitality lobby overplayed its hand on VAT reduction ] The Government has poured cold water on suggestions it would take direct action to alleviate some of these immediate pressures, notwithstanding the recent record corporation tax take. A comprehensive plan is now needed to enhance the growth potential of ambitious owner-manager businesses. Read More Could country's biggest private landlord be put up for sale? The 15-point competitiveness plan brought to Cabinet recently by Minister for Enterprise Peter Burke is an important step forward that could provide an initial blueprint for enhancing competitiveness and productivity within the domestic economy. Moving to action is now crucial. A prime example is the Government's recent decision to delay the reduction in VAT for the hospitality sector until January 2026. If the reduction is the right thing to do, delaying its introduction only prolongs the challenges faced by hotels, restaurants and cafes. In sectors such as hospitality, for example, further delays could contribute to the loss of another 500 restaurants or cafes before relief arrives. Some may have to turn to the Small Company Administrative Rescue Process (Scarp) to recover, while others will be overwhelmed and go into liquidation. As global volatility becomes the new normal, it's now time that Ireland puts indigenous businesses at the heart of its economic future. The time to act is now. Our future prosperity depends on the Government seizing the opportunities ahead and implementing bold, forward-thinking policies With the new Government developing enterprise strategy for the next decade, we must prioritise reforms and policy measures that support indigenous businesses. By doing so we can foster a more resilient and sustainable economy that can withstand international instability and disruption. Irish SMEs looking to scale up have long struggled to do so due to limited access to capital. The new enterprise strategy could unlock the barriers that are in place. One way to do so would be to use a small portion of pension fund savings to invest in indigenous firms. Read More Grab a Free Bottle of Coca-Cola Zero Sugar Using AR Firms that are able to overcome these barriers face real structural challenges in scaling globally. A key obstacle is the taxation burden. [ Trump tariffs: What 'dark and damaging scenarios' could economies face in Ireland and worldwide? ] Laying out a roadmap to reducing the rate of Capital Gains Tax to 20 per cent for Irish start-ups and scaling companies would ensure that indigenous firms scale up from this island and compete globally from here. A more balanced approach to taxation – one that incentivises risk-taking, innovation, and job creation within the real economy – should be a top priority. Many indigenous firms struggle to attract and retain skilled talent, particularly in sectors where multinationals offer significantly higher salaries and benefits. [ VAT cuts for restaurants were a bad idea last month. Why are they a good idea now? ] The latest Azets Barometer found that talent recruitment is the number two most pressing business challenge today. Government could introduce targeted measures such as enhanced tax credits for employee share options and building a stronger supply of skilled domestic talent. Developing an enterprise strategy that reflects the real economy and supports the needs of the vast majority of businesses within it is needed now more than ever. Ireland is at an economic crossroads. While foreign direct investment has played a vital role in our success story, we must now take decisive steps to pivot Ireland's economy and focus on unleashing the potential of indigenous businesses. There is no better opportunity to reshape our economic model and create a more resilient and sustainable economy, powered by thriving domestic enterprise. Read More Corporation tax D-Day looms over State's budgetary arithmetic The time to act is now. Our future prosperity depends on the Government seizing the opportunities ahead and implementing bold, forward-thinking policies as part of the upcoming enterprise strategy. The choices we make today will shape Ireland's economic landscape for decades to come. We must get them right. Neil Hughes is chief executive of Azets Ireland
