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August records lowest monthly total for insolvencies since January 2009
02 September 2010
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As reported on www.irishtimes.com; www.businessworld.ie; The Irish Independent, The Times, The Examiner, The Star, The Mirror.
Over 1,000 Corporate Insolvencies between January – August 2010
• Despite the decrease in insolvencies in August, it seems likely that insolvencies will increase again before the year is out
• Dublin recorded the highest number of insolvencies in the country - 414 failures for the year-to-date
• So far this year, examiners have been appointed to just nine companies, compared to 24 in 2009 and 18 in 2008
• 309 construction firms collapsed in the first eight months of the year but the rate of failure in the sector appears to be slowing down
• Insolvencies in the hospitality trade also increased with 128 failures recorded so far this year, up 27% on the same period last year
Over 1,000 companies have gone bust so far this year as the recession continues to hit Irish firms. 1,012 companies collapsed between January and August 2010, an increase of 14% on the same period last year. However, the number of insolvencies dropped dramatically in August, falling from 125 in July to 95 in August. This was the lowest monthly total for insolvencies so far this year and the lowest since January 2009.
Despite the decrease in insolvencies in August, it seems likely that insolvencies will increase again before the year is out. Last year, 403 insolvencies were recorded in the final quarter of the year – almost one third of total insolvencies for the year.
Commenting on the statistics, Ken Fennell, a partner with kavanaghfennell, who compile the data, said: "The decrease could be due to a traditional seasonal slowdown in August and insolvencies are likely to increase again in the final quarter of 2010 in line with the 2009 trend. Based on our analysis we expect the last quarter to show a substantial increase in the number of insolvencies."
Regionally Dublin recorded the highest number of insolvencies with 414 failures for the year-to-date. At the opposite end of the scale, Carlow has recorded the lowest level of insolvencies in 2010 with just 2 companies in the county going bust.
Low levels of examinerships continue to be recorded in 2010, however, two high-profile interim examiners were appointed in August as airline Aer Arann and house builder McInerney Homes petitioned the courts for examinership. The High Court will decide in early September whether or not to finalise the appointment of an examiner for both firms. So far this year, examiners have been appointed to just nine companies, compared to 24 in 2009 and 18 in 2008.
Construction was once again the worst affected sector with one in three insolvencies occurring in the construction trade. 309 construction firms collapsed in the first eight months of the year but the rate of failure in the sector appears to be slowing down. 32 firms collapsed in August 2010, compared to 41 in both June and July and the number of company failures so far this year is just 5% higher than last year.
"There are definite signs that the construction sector is close to the bottom," says Fennell. "The number of insolvencies in the sector is not increasing as rapidly as in 2009 and the final quarter of 2010 will give a firmer indication on whether the industry has finally reached the bottom."
The services sector recorded the second highest level of insolvencies with 187 in the first eight months of the year, 18% of the total. This represents an increase of 8% compared to the same period last year when 173 company failures were recorded.
Insolvencies in the hospitality trade also increased with 128 failures recorded so far this year, up 27% on the same period last year. Over-supply of rooms, reduced corporate demand and the downturn in consumer spending have led to receivers being appointed to an increasing number of properties.
It's better news, however, for the retail trade as the latest statistics reveal that the decline in the sector appears to have reached the floor. For the first time this year, insolvencies in the industry have not increased significantly compared to the previous year with 124 firms going bust so far in 2010 – the same figure recorded for the first eight months in 2009.
Insolvencies in the motor trade still haven't significantly decreased, despite the introduction of the car scrappage scheme last December. The scheme offers vehicle registration tax relief of up to €1,500 for those eligible but surprisingly, despite the scheme's success, 32 firms in the motor trade have gone bust so far this year, just two less than the same period last year.
Receivers were appointed to 12 companies in August, bringing the total number of Irish firms now in receivership to 155. This represents a 94% increase on the same period last year and is up a massive 400% on 2008 figures.
The receivership totals do not include personal asset receiverships as no public record is available. If these were included, the figure is likely to be higher.
View full breakdown of statistics here.
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