Firms operating in the hospitality and construction sectors accounted for the highest proportion of those going through the Small Company Administrative Rescue Process (Scarp) so far this year.
The Scarp scheme was introduced in late 2021 to help small and micro firms which are still viable, yet insolvent, restructure their debts, avoid liquidation, and ensure creditors get a better outcome rather than the company being wound down.
According to the latest Azets Scarp Index, there have been 29 Scarp cases commenced in 2024, down 12% compared to last year.
There have been 382 jobs saved this year through the process.
The hospitality sector and the construction sector both accounted for 21% of cases in 2024.
This was closely followed by the retail sector, at 17%.
Advisory and restructuring partner at Azets Ireland, Dessie Morrow, said a fall in the uptake of Scarp among small businesses this year “could be a sign that the acute financial pressures faced by businesses may have eased somewhat”.
He added: “However, there is also likely a seasonal factor at play — many struggling businesses may manage to trade through the busy festive season until the slower months of the first financial quarter.”
Azets warned that more businesses are likely to undertake Scarp in the coming months due to elevated energy costs and debt obligations.
“As more Irish businesses face financial distress over the coming months, it is important they are aware of all the available options to manage these difficulties,” said Mr Morrow.
Since the process was introduced, there have been 84 Scarp cases, with 70% resulting in successful rescue plans, saving over 1,000 jobs.
Of those cases, 55% were based in Dublin, with 77% in the wider Leinster region.
Munster accounted for 11% of cases, with 12% in Connacht and Ulster.