Dara Calleary (Mayo, Fianna Fail)
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During 2023, the economy’s strong performance and the positive impact of temporary Government supports has resulted in a lower level of insolvency than expected.

While a reversion to pre-pandemic levels of corporate insolvency is possible, delivery of SCARP as a new restructuring option for the vast majority of Ireland’s companies has helped ensure the survival of those businesses which continue to have a competitive offering. The Companies (Rescue Process for Small and Micro Companies) Act 2021, which provides for SCARP, came into effect on 7 December 2021.

The Companies Act 2014 provides for the State’s main corporate recovery process, the long-standing and internationally recognised examinership framework, and also provides for the liquidation process which is an orderly and well-established mechanism for winding up of companies on both a voluntary and compulsory basis. There are still low levels of company closures; incorporations versus liquidations in 2023 remains broadly at a ratio of ten to one. According to the Companies Registration Office (CRO), the number of SME liquidations recorded to 1st December this year was 1,324; these figures were 1,325 for 2022 and 1,237 for 2021.

I am pleased that SCARP, which provides an accessible and cost-effective restructuring process for small viable companies experiencing temporary financial problems, has been welcomed as a valuable addition to the State’s restructuring toolkit for our small company sector.

My Department continues to monitor use of SCARP and so far, 50 small companies have availed of the process according to CRO data. While uptake is low to date it is important to note that this is in the context where liquidation activities, while rising, remain below pre-pandemic levels. I also note the increase in applications this year in comparison to the first year of operation. Positive feedback from the enterprise sector and practitioners suggests that SCARP is well positioned to assist companies in the period ahead, which is reflected in the registration of almost 65% of approved rescue plans with the CRO.

The decision to enter the Process is a matter for individual firms and their respective advisers. The availability of SCARP as a means to restructure can also encourage creditors to engage constructively with viable companies in distress, diminishing the necessity to enter into a formal process.