Changes to SCARP thresholds make it more widely accessible for Irish companies

The Small Companies Administrative Rescue Process or "SCARP" was brought in back in 2021 with the aim of providing a feasible restructuring process for small companies that was more affordable than the existing examinership process.

Originally, a "small company" for the purposes of availing of this procedure was one that met two of the following three requirements:

• Fewer than 50 employees
• Turnover of less than or equal to €12 million per annum
• A balance sheet total not exceeding €6 million

An update to company legislation which came into effect from 1 July 2024 adjusts these criteria to make the procedure available to a larger number of Irish companies.

In order to be eligible, a company must now meet two of the following three criteria:

• Fewer than 50 employees
• Turnover of less than or equal to €15 million per annum
• A balance sheet total not exceeding €7.5 million

  In addition to the above, companies must still meet the other requirements, namely that the company:

• Cannot be in liquidation
• Cannot be in receivership (however, in cases where a receiver is appointed for less than three working days, a company may still avail of SCARP)
• Cannot have been through a SCARP or examinership process within the last five years
• Is not in a position to pay its debts as they fall due, or is unlikely to be in a position to pay its debts

At the time of writing, there have been a total of 73 companies who have entered SCARP, with 51 of these being successful, 17 unsuccessful, and 5 still ongoing.

You can find more information on our SCARP services here, or you can contact a member of our restructuring and insolvency services team.