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At McCarthy Walsh, our team helps clients avail of the SCARP Scheme. The Small Companies Administrative Rescue Process (SCARP) is a legislative initiative introduced by the Irish Government to facilitate the efficient restructuring of financially viable small businesses needing rescue. This article provides an overview of the SCARP scheme and the rationale behind its implementation.
Recognising the challenges faced by small businesses experiencing financial distress, the Irish Government has taken a proactive approach to support their recovery. SCARP aims to expedite the restructuring process for these businesses, providing them with a viable path towards financial stability and business continuity.
The introduction of SCARP is driven by the understanding that small businesses often encounter unique difficulties when faced with financial hardships. Traditional insolvency procedures can be time-consuming and costly, making it challenging for small businesses to navigate the restructuring process effectively. SCARP seeks to address these limitations by streamlining the rescue process, enabling small companies to implement necessary changes swiftly and efficiently.
Under SCARP, viable small businesses can avail themselves of a simplified restructuring framework that focuses on preserving and maximising their value. The process involves appointing a qualified insolvency practitioner who works closely with the business owner and stakeholders to develop a restructuring plan tailored to the company's needs. This collaborative approach promotes effective decision-making and enhances the chances of a successful turnaround.
The key objective of SCARP is to strike a balance between the interests of the small business and its creditors. By facilitating a more efficient rescue process, the scheme aims to increase the likelihood of creditors recovering their debts while allowing small business to continue their operations and contribute to the local economy.
Who is SCARP catered to ?
The SCARP scheme is available for companies with up to 50 employees maximum. This company must have a turnover of 12 million EURO or under. You must also have a balance sheet that does not exceed 6 million euro.
How can the SCARP Scheme assist you?
The main ways that the SCARP Scheme can assist companies is:
- Financial pressure
- Mounting Debts
Why is SCARP needed?
Small businesses account for 98 per cent of all companies in Ireland, highlighting their significant presence in the country's economy. Given their substantial contribution, it became evident that an additional scheme was required to complement the existing examinership process and address the specific needs of these small enterprises.