Small Company Administrative Rescue Process SCARP

Friel Stafford > Small Company Administrative Rescue Process SCARP

What is the Small Company Administrative Rescue Process SCARP?

The Small Company Administrative Rescue Process SCARP is a corporate rescue mechanism focused on SMEs.. The Government recognised that the Examinership process was too costly for many SMEs. The primary objective of the Small Company Administrative Rescue Process to save a company and any jobs provided by it.

The Small Company Administrative Rescue Process underwent a public consultation process which concluded on 5 March 2021. The Bill in respect of the legislation was published on 19th May 2021, updated on 22 June 2021 and approved by the Dail on 13th July 2021 and commenced on 7 December 2021.The Small Company Administrative Rescue Process provides the following:

  • A focus on small companies that satisfies two or more of the following three requirements:
    • Annual turnover of up to €12m;
    • A balance sheet total of up to €6m;
    • Up to 50 employees.
  • Commencement of the process by resolution of directors rather than a court application.
  • 60% in number of creditors and a majority in value of at least one creditor pool is required to support the rescue plan, rather than the 75% vote required in a scheme of arrangement under Part 9 of the Companies Act.
  • A cross cram down of debts is available as part of the restructure.
  • Likely the rescue plan approved will not require an application to court, provided no creditors object.
  • Safeguards against irresponsible and dishonest behaviour by directors that apply in liquidation will apply to the process.
  • An insolvency practitioner (who must be qualified to act as liquidator under the Companies Act) is appointed by the company to begin engagement with creditors and prepare a rescue plan. His/Her formal title will be “the Process Advisor”. The rescue plan must satisfy the ‘best interest of creditors’ test and provide each creditor with a better outcome than a liquidation. In addition to this, no creditor may be unfairly prejudiced by the plan. This is in keeping with established principles under examinership
  • Creditors are invited to vote on the rescue plan by day 42 of the Process Advisor’s appointment.
  • The rescue plan is approved without the requirement for Court approval provided that 60% in number and a majority of creditors in at least one creditor pool vote in favour of the proposal and no creditor raises an objection to the plan within the 21-day cooling off period which follows the vote. The approval mechanism is drawn from examinership and provides for a cross class cram down. This means that where one class of impaired creditor votes in favour of the plan, this decision can then be imposed on all classes of creditors
  • Where an objection to the rescue plan is raised, there is an automatic obligation on the company to seek the Court’s approval. This acts as a safeguard for creditors
  • Concluded within a shorter period than examinership (examinerships can currently run for up to 150 days, SCARP seeks to arrive at a conclusion within 70 days, subject to extension where necessary for Court applications)
  • Has safeguards against irresponsible and dishonest director behaviour. The Office of the Director of Corporate Enforcement also has a suite of powers to examine books and investigate, as appropriate, in line with that which is provided for in relation to liquidations, receiverships and examinerships
  • Provides that State creditors, the Department of Social Protection and the Revenue Commissioners may be excludable from the process. This means they may determine to “opt out” of the process on the basis of statutory grounds, for example if the company has a poor history of tax compliance.
  • It will allow Landlord’s leases to be repudiated, but an application to court will be necessary if the landlord does not voluntarily agree.

The Small Company Administrative Rescue Process will be an agreement between your company and its creditors to gradually pay off your debts over a short-term or a long-term period, typically from one to five years, or, alternatively, to accept a lump sum payment. Entering into a Small Company Administrative Rescue Process can prevent creditors from winding up your business using a winding up petition. This allows you to continue trading while paying back your creditors over time and keeping your company in business. 

Can our existing accountants do a Small Company Administrative Rescue Process for us?

Only an authorised Insolvency Practitioner will be able to implement a Small Company Administrative Rescue Process. As Insolvency Practitioners must be independent of the company then your your existing accountants cannot act as the Process Advisor. However, we would work closely with your existing accountants to achieve the best results.

Will  your company be eligible to propose a Small Company Administrative Rescue Process?

Not all companies will be  eligible to enter into a SCARP. If your company has a business model that just isn’t viable and hasn’t ever produced a profit, it’s unlikely that your creditors will be willing to accept a SCARP proposal.

In order to successfully propose and comply with a SCARP, your company needs to show that the company will be financially viable. For some businesses, such as retail and hospitality, it will be challenging to assess future viability post-Covid. For example, in respect of pubs, the consensus  view is that when pubs do finally re-open that sales in Year 1 will be 55% -60% of 2019 sales, Year 2 will be 75%, year 3 will be 85%. For some pubs, sales will not get back to full 2019 levels due to a change in consumer habits. In respect of fashion retail, Covid has propelled us 10 years into the future, and over 50% of such sales are now carried out online.

What will be  the advantages of entering into a Small Company Administrative Rescue Process?

For most insolvent companies, the biggest benefits of a SCARP will be  the core elements of the agreement itself:  it will let your company pay its debts over time and write off a percentage of its total debts to creditors, improving cash flow in the short term.

Unlike liquidation, which could leave creditors with little or no money once your company is wound up, a SCARP guarantees creditors a certain amount of their debt over the repayment period. 

What will be the disadvantages of entering into a SCARP?

  • If your company breaks the terms of its SCARP by missing a payment, it could still end up being wound up by its creditors.
  • Entering into a SCARP could have negative consequences for your company’s credit rating. Your website must carry a “prominent” notice that you have entered a SCARP process. A SCARP notice would also be filed at
  • There’s no guarantee that your SCARP proposal will be accepted.
  • A SCARP may not be  a short-term solution. Your company could spend several years repaying its creditors before the SCARP is completed.
  • Any personal guarantees that the directors provided to creditors will remain in place.
  • Certain directors may remain personally liable for any PAYE that was deducted from their salaries and which is written off in the SCARP.

Are there any steps we should be taking now?

If you believe you will end up needing a SCARP then you should consider if you need to take preparatory steps now. The steps to be taken will depend on the specific circumstances facing your company. Such steps might include some of the following:

  • Implementing a “pay freeze” in respect of certain creditors
  • Implementing a redundancy programme
  • Surrendering leases to landlords
  • Obtain valuations of buildings, plant & machinery.
  • Bring management accounts up to date,
  • Submit all tax returns. In particular, ensure that you have adjusted your VAT returns if you have not paid a supplier within the required 6 months.
  • Commence preparing a pack of information for the Process Advisor such as: a brief history of the company, an organisation chart, summaries of property leases and finance leases, summary of employees salaries and employment history, excel spreadsheet of all creditors to include postal and email addressees, cash flow forecasts and trading forecasts.
  • Appoint an experienced Insolvency Practitioner to guide you through the process.

We can provide expert advice on all necessary steps, including how to communicate with creditors.

What are the other options to a Small Company Administrative Rescue Process?

For information on Turnaround, Schemes of Arrangement, Receivership, Examinership or Creditors Voluntary Liquidation please click on the following links:


Schemes of Arrangement



Creditors Voluntary Liquidation

How can Friel Stafford assist?

We have established three SCARP teams, headed up by three qualified and registered insolvency practitioners. Jim Stafford, Tom Murray and Andrew Hendrick, to advise companies on SCARP. We deal with all queries on a highly confidential basis.

For further information please email either or