Understanding the Recovery and Rescue Options Available to Irish Companies

The Earlier You Act, The More Options You Have 

Recent years have demonstrated just how quickly market conditions can change. Inflationary pressures, rising employment costs, supply chain disruption, changing consumer behaviour and increased borrowing costs have combined to create significant challenges for many Irish businesses. 

While financial distress can be overwhelming for directors and business owners, one reality is often overlooked: businesses experiencing financial difficulty usually have more options available than they realise. 

The key differentiator is often not the severity of the problem, but how early action is taken. 

In Ireland, directors of struggling businesses have several formal mechanisms available to preserve value, protect employment, and in some cases secure the long-term survival of the business. These include the Small Company Administrative Rescue Process (SCARP), Examinership and Liquidation. Each serves a different purpose, and understanding the distinction can be critical when navigating financial uncertainty. 

Business Rescue Is No Longer One-Size-Fits-All 

Historically, Examinership was viewed as the primary corporate rescue tool in Ireland. While highly effective, it can be costly and complex, making it inaccessible for many smaller businesses. 

Recognising this challenge, the introduction of SCARP created a dedicated restructuring option for small and micro companies. The process provides a more cost-effective route for viable businesses to restructure debt and continue trading. 

At the same time, directors should recognise that not every distressed company can be rescued in its current form. In some situations, preserving the business itself, rather than the legal entity, may provide the best outcome. This is where a Liquidation can play an important role. 

The modern restructuring landscape offers a broader range of solutions than ever before. The challenge is identifying the right option at the right time. 

Feature	SCARP	Liquidation	Examinership
Primary Objective	Rescue a viable but insolvent small or micro company through a restructuring plan.	Preserve business value by selling the business/assets at market value prior to the commencement of liquidation.	Rescue a viable company through court protection and restructuring.
Introduced	2021 under the Companies (Rescue Process for Small and Micro Companies) Act.	Developed through insolvency practice rather than a standalone statutory regime.	Long-established corporate rescue procedure under the Companies Act 2014.
Suitable For	Small and micro companies facing financial distress but with a viable underlying business.	Where the underlying business continues to generate revenue and can produce positive cash flow, but legacy debts have become overwhelming.	Medium or large companies with a realistic prospect of survival.
Court Involvement	Generally court-light; court involvement only in limited circumstances or challenges.	None.	Court-supervised throughout.
Protection from Creditors	No automatic court protection period, although the Process Adviser oversees a restructuring plan.	None required as creditors remain with company in liquidation.	Automatic court protection (up to 100 days in most cases).
Who	Directors generally remain in control during the process.	Control of the ongoing business transfers to the new company that acquires the assets and trade.	Directors remain involved while Examiner oversees restructuring.
Cost	Relatively low cost.	Relatively low cost.	Usually the most expensive option due to court oversight and professional costs.
Funding required	Partial dividend payment for creditors and/or working capital.	Funding required to purchase assets at market value.	Partial dividend payment for creditors and/or working capital.
Speed	Typically completed within weeks to a few months.	Very quickly, usually within a few weeks.	Usually several months from appointment to court approval.
Debt Write-Off Capability	Yes. Can compromise unsecured creditor claims through a rescue plan.	No. Debts remain with the liquidated company unless specifically assumed by purchaser.	Yes. Can significantly compromise debts through a scheme of arrangement.
Employee Impact	Business and employment can continue if rescue plan succeeds.	Employees may transfer to purchaser under TUPE principles where applicable.	Business and employment typically preserved if rescue succeeds.
Secured Creditor Position	More limited ability to impair secured creditors without consent.	Security rights generally remain attached to assets and sale proceeds.	Greater flexibility in restructuring secured and unsecured claims, subject to court approval.
Outcome if	Company survives with restructured debt and improved balance sheet.	Business continues under a new owner or structure; original company with debts is liquidated.	Company emerges from protection as a restructured going concern.
Key Advantage	Cost-effective rescue solution for SMEs.	Maximises value and preserves jobs where a formal rescue is not achievable.	Powerful restructuring tool with strong creditor protection mechanisms.
Key Drawback	Limited to eligible small and micro companies.	Original company does not survive. Key relationships for new entity will have to be established.	Cost and complexity can be prohibitive for smaller businesses.

SCARP: Giving SMEs a Second Chance 

SCARP was designed specifically for small and micro businesses that remain fundamentally viable but are burdened by unsustainable debt. 

The attraction of the process lies in its relative simplicity. It is largely conducted outside the courts, reducing both cost and complexity. Directors generally remain involved in running the business while a rescue plan is developed and presented to creditors. 

For many owner-managed businesses, this can offer a genuine opportunity to reset the balance sheet, restore confidence among stakeholders, and emerge as a sustainable operation. 

The introduction of SCARP has fundamentally changed the conversation around SME distress. Rather than viewing insolvency as a binary choice between survival and closure, many businesses now have access to an affordable restructuring pathway. 

Examinership: The Benchmark for Complex Restructuring 

While SCARP has broadened access to restructuring, Examinership remains one of the most powerful corporate rescue mechanisms available in Ireland. 

It provides court protection while an independent Examiner works to formulate a restructuring proposal capable of securing the company's survival. 

The strength of Examinership lies in its flexibility and the protections it affords businesses during a critical period. It can address complex creditor structures, facilitate new investment, and provide a formal framework for negotiating with stakeholders. 

For larger businesses or organisations with significant debt obligations, multiple creditor classes or complex operational structures, Examinership often remains the most appropriate solution. 

However, the process requires specialist advice and can involve substantial professional and legal costs. Consequently, it is generally most suitable where the scale of the business justifies the investment. 

When Rescue Is Not Possible: The Role of Liquidation 

Business recovery discussions often focus exclusively on saving the company. However, in some situations, the company itself may no longer be viable, while the underlying business retains considerable value. 

Typically, a sale of the business is negotiated before liquidation, allowing assets, contracts, and operations to transfer rapidly to a purchaser once the liquidation process begins. Although the original company subsequently enters liquidation, the sale proceeds are retained by the company and distributed among creditors in accordance with the statutory order of priority established under the Companies Act 2014. 

While the original company enters liquidation, the business can continue trading under new ownership or a new corporate structure. In many cases, jobs can be preserved, customers experience minimal disruption and value that might otherwise be lost through a prolonged liquidation process can be protected. 

For directors, this can be an important distinction. Success is not always measured by saving the existing company. Sometimes the best outcome is protecting employees, customers and enterprise value through an orderly transition. 

The Cost of Waiting 

Across all restructuring and insolvency processes, one theme consistently emerges: options diminish as financial difficulties deepen. 

Directors frequently postpone seeking advice in the hope that trading conditions will improve and that the business can work its way through the challenges, without a formal plan for how that’s going to be achieved. Concerns about reputation and the misconception that insolvency procedures represent failure can further delay action. 

In reality, the opposite is often true. The earlier professional advice is obtained, the greater the scope for restructuring, refinancing, operational improvement, and stakeholder engagement. Delays can reduce available options, erode value, and increase risks for directors and creditors alike. Directors who continue trading while a company is insolvent may also expose themselves to increased scrutiny from the Corporate Enforcement Authority through statutory reporting obligations that liquidators are required to fulfil. In certain circumstances, directors may also face personal liability for company debts, making early intervention particularly important. 

By the time cash reserves are exhausted or creditor pressure becomes overwhelming, pathways that may have been available months earlier can become significantly more difficult to implement. 

Choosing the Right Route 

There is no single solution for financial distress. 

A viable SME may benefit from the accessibility and affordability of SCARP. A larger business facing complex financial challenges may require the protections available through Examinership. Where rescue is no longer realistic, a Liquidation may offer the best opportunity to preserve jobs and maximise value. 

The critical point is that insolvency should not be viewed solely as an endpoint. 

Used appropriately, these processes are tools that can facilitate recovery, preserve value, and create opportunities for a fresh start. 

Get in Touch

If you would like to discuss your situation in confidence, our Restructuring and Insolvency specialist Peter Dawson at [email protected] is here to help. He will provide clear, practical guidance to support you at every stage. Check out our Restructuring & Insolvency page for more information.