Six companies and 23 jobs have been secured through January 2023 as a result of Small Company Administrative Rescue Process (SCARP), according to business advisory firm Baker Tilly.
Baker Tilly tallies 16 firms and 356 jobs saved during SCARP's first year of operation.
Under SCARP, a Process Advisor is appointed to prepare a rescue plan and 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," said Dessie Morrow, corporate restructuring director at Baker Tilly.
"Obviously, 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.
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“However, as we look ahead, it is vital that more and more businesses are made aware of this cost-effective restructuring option in order to survive these challenging times. 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."
Six companies have exited SCARP with the support of Baker Tilly process advisors, Conor Noone and Diarmaid Guthrie, including three companies behind the Entertainment.ie platform (Sortridge Limited, Entertainment Media Networks Limited and Castleforbes Investments Limited).
Digital marketing company Socio Local Limited, online jewellery retailer Lilywho Limited, and Dublin-based mechanical services and tyre sales provider Total Tyres & Accessories Limited also completed the rescue process recently.
"Whilst I wouldn’t wish anyone to be in the position of needing SCARP, it is designed for companies with a real viable business but with historic debt they can’t outgrow," said Michael Nolan, CEO of Socio Local.
"We had to cut deep but have now come out of the process a leaner, more focused business with the best chance to prosper."
Baker Tilly as process advisor in 13 out of 23 cases undertaken to date.
Out of 12 of those cases, rescue plans have been approved for 10, with one additional case currently the subject of an objection despite creditors in that case have similarly approved the rescue plan. One appointment has just commenced.
“The jobs saved through the SCARP process over the past week are important as the people involved can remain in employment in local indigenous companies that are contributing to the economy and local communities," Morrow stated.
"In a period of rising costs and economic uncertainty, it is encouraging for small businesses to know that there is a process available to them if they find themselves in financial difficulty.
“The latest restructurings demonstrate the positive outcomes that can be secured for business owners who feel unable to trade through current difficulties and are considering a liquidation. Although in its infancy, SCARP can be an important lifeline for many small businesses across Ireland.”
(Pic: Getty Images)
