Ireland needs to move from a liquidation culture to a rescue culture

BDO Ireland
News
2026
Ireland needs to move from a liquidation culture to a rescue culture

Ireland needs to move from a liquidation culture to a rescue culture

Ireland has built a strong, resilient and entrepreneurial economy yet when businesses hit distress, the default response is still too often liquidation-first, rather than rescue-first. A shift towards a rescue mindset where viable businesses are stabilised and restructured protects more jobs, preserves value, and reduces contagion / domino effects for other businesses.

What “liquidation culture” vs “rescue culture” really means

Liquidation culture is where the prevailing mindset is closure once cash tightens. Directors / business owners treat financial distress as failure and not a solvable commercial problem. They wait until arrears, creditor pressure, or Revenue enforcement makes choices limited.

A Rescue culture or mindset is where businesses identify distress early, prioritise stabilisation and restructuring, use legal and commercial tools to preserve viable operations, share information quickly, negotiate pragmatically with creditors, and focus on future cash generation. A rescue culture is not about saving every company. It is about saving viable companies and winding down the rest efficiently and responsibly. If a company cannot be saved there’s a possibility a Liquidator or Receiver could sell all or part of its business and assets preserving value and employment, but again that’s only where early action is taken.

Formal corporate rescue processes as a percentage of total corporate insolvencies

Jurisdiction	H1 2026	2025	2024
USA	27%	35%	37%
France (to May 2026)	34%	33%	31%
Italy	TBC	26%	20%
UK	10%	7%	8%
Ireland	6%	5%	5%

Comparison with other jurisdictions

That’s not to say that directors / management are not exploring their options early and its impossible to know if this happens in most or a lot of cases. But when you compare Ireland’s corporate rescue stats with other jurisdictions we are very low, especially compared to the UK which is a much larger economy than ours.

Chapter 11 rescue processes in the USA are generally considered to be very expensive however, the Subchapter V of the Chapter 11 process makes up around 33% on average of all Chapter 11 processes in the US. The Subchapter V process is designed for small businesses. So that’s around 7-10% of all corporate insolvencies, again higher than Ireland. It is difficult to obtain exact figures for formal rescue processes in the Netherlands and Germany as there are also informal / out-of-court processes which are not publicly available. But the Whoa process (Dutch) and StaRUG (German) process are around 2-4% of annual corporate insolvencies in those jurisdictions, with actual rescues likely to be a much higher percentage. In Spain there are similar levels of formal rescue processes averaging around 5% of total corporate insolvencies.

There are various restructuring tools, not just formal rescue processes. Informal workouts include consensual agreements with lenders and major creditors. Operational restructuring can focus on cost reduction, pricing review, business rationalisation. Balance sheet restructuring can deal with rescheduling or refinancing debt, debt-for-equity swaps (where applicable). It is important for businesses to match the rescue tool to the problem is it a liquidity issue, a profitability issue, or balance sheet issue.

There have been some criticisms of our formal rescue processes Examinership and SCARP. For example, Examinership can be seen as too expensive, but Examinership offers investors an opportunity to acquire a viable restructured business potentially at a significant discount. The cost of entering examinership is not necessarily expensive but its relative to the size of the company. The Examinership process itself is funded by the investment offer for the company which also includes the dividend payable to various classes of creditor.

SCARP has been criticised because of Revenue’s ability to opt out of the process. However, when you see the stats, Revenue are mostly supportive of SCARP as their opt-in rate remains high at around 77%. Therefore, this shouldn’t be seen as a deterrent by small and micro companies from considering SCARP. Most rescue processes across jurisdictions have their own nuances / risks. Take Whoa for example where SMEs must receive a dividend of at least 20% unless they agree to a lower dividend. That could be seen as an off-putting requirement, yet it is availed of more than Examinership and SCARP in Ireland (as a percentage of total corporate failures).

Small Companies Administrative Rescue Process

Year	Number of SCARP cases	Total Debt of all cases	Revenue Opt In / Not a Creditor	Revenue Opt Out	Total debt in cases where Revenue opted in
2022	22	€11,338,901.97	20	2	€10,805,135.13
2023	32	€14,125,270.19	28	4	€12,565,760.42
2024	29	€12,863,196.19	18	11	€6,543,541.26
2025	23	€11,331,933.83	16	7	€7,376,273.04
2026(Jan-June)	15	€5,717,407.74	13	2	€3,456,264.85
Total	121	€55,376,709.92	95	26	€40,746,974.70

Benefits of a stronger rescue culture

Value is typically higher in rescue than liquidation. Liquidation usually realises “break-up value” (often low), while rescue processes preserve value of the business, its goodwill, customer contracts and recurring revenue, brand and market position, Workforce capability, Supplier relationships, Intellectual property and operating know-how. Usually, the operating business as a going concern is worth materially more than its assets sold in pieces.

Job protection is a clear and important benefit. Rescue efforts can save jobs while restructuring cost bases

Reduced contagion across sectors. Depending on the size of the company in distress, it can reduce knock-on insolvencies among suppliers and service providers. A liquidation-driven approach can trigger “domino effects”: Suppliers lose key accounts, Landlords face vacancy risk, local firms lose turnover etc.

Earlier action improves outcomes. Most business failures are not sudden, they are a progression over time. There are margin reductions, cash strain, building up of arrears, then creditor escalation which can lead to formal insolvency.

Somewhere along that journey businesses need to recognise these issues. A rescue culture encourages early, informed decision-making, when options are widest and outcomes best.

What holds rescue culture back / prevents a rescue mindset

Stigma. Directors often delay engagement because distress is viewed as reputationally damaging. This is despite it being far more risky for directors personally so delay action, as there could be ramifications for directors in a liquidation if they failed to fulfil their statutory duties and obligations, a key one being that directors must have regard for the interests of creditors when their business is insolvent or insolvency is imminent. Some businesses are even reluctant to explore rescue processes as they also believe these could be reputationally damaging despite being the best option to save the business.

Slow decision making and late consideration of the true financial position and prospects for the company. Poor or outdated reporting leads to decisions made in the dark or shooting from the hip.

How Irish businesses can shift to a rescue-first approach

Put in place early-warning indicators. CEA has guidance on these but businesses should adopt a small set of practical triggers that force action:13-week rolling cashflow shows tightening headroom, repeated reliance on tax payment deferrals, creditor days stretching beyond agreed terms, reduction in margin which is difficult to explain, loan covenant pressure or inability to refinance on normal terms, loss of a top customer or supplier concentration risk. These should be the subject of regular review, monthly or twice monthly instead of period end focus.

Must be a focus on cash flow. When facing financial distress cash flow is key. Needs to be a very disciplined approach towards weekly cash collection tracking and debtor prioritisation, tight controls on discretionary spend, renegotiation of payment terms (suppliers, landlords, lenders), stock and WIP management to reduce trapped cash.

Business owners or directors must assess viability quickly and honestly, which isn’t easy. A rescue mindset depends on distinguishing whether its temporary distress (cash timing, one-off shocks, short-term margin pressure) or structural distress (uncompetitive cost base, broken business model, persistently loss-making). This then leads to the viability assessment - can the business generate sustainable positive cashflow after restructuring? Are issues operationally fixable within a reasonable timeframe? Is the capital structure realistic? Can the business be profitable? Businesses need to look at viability issues very quickly after initial distress signals instead of waiting for creditor pressure to drive the urgency.

Shifting from liquidation culture to rescue culture is not about avoiding accountability. It’s about maximising economic value, protecting employment, and taking responsible, sensible actions as directors. Companies that adopt early-warning systems, cash discipline, viability testing, and structured stakeholder engagement will not only survive distress more often, they will emerge leaner, better governed, and more investable, with much better future prospects. Difficult for business owners to make these decisions after they’ve worked hard building the business from the ground up, but it’s the responsibility of professional advisors to give them objective advice and inform them of the huge benefits of acting early to deal with distress rather than letting it fester and become and unsolvable problem.

Content adapted from the Irish Independent.