Next year could see a 'spike' in small firm restructuring cases 

Advisory and restructuring partner at Azets Ireland Dessie Morrow said without further supports, 'we could see a significant spike in small businesses closing their doors in the early months of 2026,' as the cost-of-doing business rises. File picture

There could be a “significant spike” in the number of companies availing of the Small Company Administrative Rescue Process (Scarp) in the early part of next year as a number of increases to the cost-of-doing business are due to come into effect from January 1, business advisory group Azets has said.

Scarp aims to facilitate simplified out-of-court debt restructuring for small businesses deemed to be viable. As part of the scheme, a process adviser is appointed to prepare a rescue plan and to work with creditors to consolidate company debts.

It is available to small and micro companies with no more than 50 employees, turnover not exceeding €12m, and a balance sheet not exceeding €6m.

The process was introduced in 2021 and since then it has saved 1,448 jobs from being lost due to otherwise viable companies being forced to close, according to Azets. However, the number of businesses availing of the process has been small and this year it has fallen once again.

Research conducted by Azets Ireland reveals there have been 108 Scarp cases since the introduction of the scheme four years ago. Of these cases, 78 have resulted in successful rescue plans.

Just 23 companies commenced a Scarp process in 2025, a 23% drop compared to 2024. There were 374 jobs saved this year as a result of successful Scarps concluded this year.

According to research by Azets, the hospitality sector accounted for 30% of all the Scarps over the last 12 months with construction at 11%, and retail at 7%. 

Dublin saw the largest concentration of Scarp cases, accounting for 70% with 11% in the wider Leinster region.

Munster accounted for 15%.

While take-up of the process was low this year, Azerts is forecasting an increased demand in early 2026 due to cost of business increases including a minimum wage hike as well as the introduction of the MyFutureFund auto-enrolment.

Advisory and restructuring partner at Azets Ireland Dessie Morrow said there are “growing signs of a “two-track economy” as multinational companies continue to grow while “many small indigenous businesses are struggling to cope with the challenges of rising costs and economic uncertainty”.

While many of these businesses, particularly in the hospitality and retail sector, may manage to continue trading through the busy festive season, more firms could face closure in early 2026.

He added that the increased cost-of-doing business costs coming into effect next year will “create further financial headwinds for small businesses”.

“Without further supports, we could see a significant spike in small businesses closing their doors in the early months of 2026,” he said.

Mr Morrow called Scarp a “valuable lifeline supporting small businesses facing financial difficulties” and an “important restructuring option” that can help protect and secure jobs in Irish companies.

According to the most recent figures from professional services firm PwC, during the first nine months of the year, there have been 641 insolvencies recorded. The company forecasted total insolvencies for the year to be in the region of 850.

In 2024, 868 insolvencies were recorded.