The message from company rescue specialists is that the Small Company Administrative Rescue Process (Scarp), introduced in December 2021, is working well.
After 22 small and microcompanies availed of the new rescue regime for smaller businesses between its introduction and the end of 2022, a further 33 Scarp appointments were made last year – a 50 per cent increase – as more viable businesses turned to it as a means to restructure in a more cost-effective manner than had previously been possible.
This supports the view that demand is there for Scarp and that, given the appointments have led to rescues in 76 per cent of cases – resulting in almost 600 jobs being saved at 35 companies, according to Deloitte Ireland – Scarp is doing the job it is designed to do.
Some potential may remain untapped. As Deloitte turnaround and restructuring partner James Anderson said this week, awareness of Scarp and its benefits “is still not widely considered by advisers and/or business owners/directors, but hopefully that will change in time”.
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The message is clear: the more timely interventions facilitated by Scarp give companies experiencing financial difficulties broader options and a better chance to survive.
But there’s an obvious dark side to this increase in usage: the greater need for small businesses to be rescued in the first instance.
A spate of statistics has documented the rising tide of insolvencies in 2023. This may soon give way to the wrong kind of start to 2024, as business owners who clung on for Christmas trade conclude in the cold light of January that they have no option other than to shut their doors.
While some price pressures may be easing, the legacy of an inflation-scarred year rumbles on for many cash-squeezed ventures. And with anxiety and caution remaining the running theme of consumer sentiment surveys, a depressing number of businesses – such as those in hospitality and independent retail – that enliven our days and enrich our lives in the good times may find themselves unable to struggle on for much longer through the difficult ones.
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