Small Companies Administrative Rescue Process
- Published on: 11 June 2024
- Last updated on: 9 December 2024
The Companies (Rescue Process for Small and Micro Companies) Act 2021, which commenced on 8 December 2021, provides for a dedicated rescue process for small and micro companies, namely the 'Small Companies Administrative Rescue Process (SCARP)'.
SCARP allows fundamentally viable companies experiencing temporary financial problems to restructure with the agreement of creditors. It is initiated by the directors of the company concerned and has limited court involvement where creditors are actively engaged and are positively disposed to a rescue plan. The process mirrors elements of examinership but with a simplified administrative process making it potentially both quicker and cheaper.
SCARP is providing an effective lifeline to viable small and micro companies that would otherwise go into liquidation, thus maintaining jobs and maximising total value to creditors.
Eligibility criteria
To avail of SCARP, a company must meet the following criteria:
The company must be a small or micro company as defined by the Companies Act 2014.
A small or micro company is one which meets two of the following three conditions:
(a) No more than 50 employees
(b) Turnover must not exceed €15 million
(c) Balance sheet must not exceed €7.5 million
The company is, or is likely to be, unable to pay its debts.
The company must not be in liquidation.
The company must not have appointed an examiner or process adviser in the previous 5 years.
If a receiver has been appointed to the company, the company is eligible only if that receiver has been appointed for a period of less than 3 working days.
In order to avail of SCARP a company must also be fundamentally viable and capable of trading its way out of its current difficulties. Assessing the viability of the company is the first determination which the Process Adviser is required to make following their initial appointment by the Directors of the company.
An information handbook providing clear and accessible information on SCARP is provided below. Further information on the legislative framework is also provided.
