No evidence of looming ‘tsunami’ in business failures, department says

There has been no sign of a “tsunami” in corporate insolvencies many expected as pandemic-era business supports were in unwound in recent years, Department of Enterprise, Trade and Employment officials have said.

Officials from the department and Revenue Commissioners appeared before the Oireachtas Enterprise Committee to discuss the process, which was rolled out in 2021. Aimed at small and micro businesses, Scarp aims to facilitate simplified out-of-court debt restructuring for companies deemed to be viable, acting as an alternative to the more expensive examinership process.

The insolvency rate was kept artificially low during the Covid-19 pandemic due to the roll-out of generous business supports and other arrangements such as the debt warehousing scheme. While business failure rates have begun to tick up again, Ms O’Dea said there was little evidence to suggest a “tsunami” of insolvencies was in the offing.

However, officials said the department does not keep detailed information on the reasons why companies apply for protection under Scarp. Business lobby groups including Ibec have recently claimed the cost of various labour market interventions by the Government, including the commitment to introducing a national living wage by January, 2026, will result in further business failures and job losses.

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