Five firms a day go out of business

By Geoff Percival

Monday, March 01, 2010

AN average of five companies per day went out of business last month, as the rate of business failures jumped by 33% on January’s levels.

The new figures from InsolvencyJournal.ie – the service operated by the country’s largest corporate recovery company Kavanagh Fennell – show that 146 companies went out of business in February compared with the 110 that failed in January.

According to Ken Fennell of Kavanagh Fennell, the monthly increase in insolvencies is significant and could well contribute to 2010 being a worse year, for business survival, than 2009. "This was the second highest monthly total, second only to December 2009, recorded by InsolvencyJournal.ie since January 2007.

"If the trend continues, total insolvencies this year could exceed the 1,406 insolvencies recorded in 2009. Dublin was particularly badly affected and accounted for 38% of all insolvencies," he said.

On a regional basis, Leinster was worst hit – accounting for 60% of February’s total number of insolvencies – but there was renewed concern for the west, as the number of companies going out of business in Connacht more than doubled from seven in January to 18 last month.

In terms of sectoral effect, the construction industry was worst hit, with 47 insolvencies reported in the month, representing a 34% month-on-month rise and a real indication that the sector’s downturn is yet to bottom out.

The retail industry was also hard hit – companies going bust more than doubling from 12 in January to 26 in February.

While the services and hospitality industries also recorded minor increases in corporate failures last month, the combined manufacturing sectors bucked the downward trend, with insolvencies there almost halving; from 11 recorded in January to "only" six in February.

There was also better news for the motor industry, which continued to record low numbers of insolvencies in the last month – only two company failures notable for the sector; something which has been largely attributed to the effect the Government’s car scrappage scheme is having on the industry. A further bit of good news from the latest InsolvencyJournal report is that the number of companies going into receivership appears to be slowing down.

A total of 17 receivers were appointed to companies in trouble last month, which was down from 21 in January.

After two consecutive months during which there were no applications for court protection granted by the High Court , three companies, including the Jackie Skelly chain of fitness clubs, entered examinership in February.

This story appeared in the printed version of the Irish Examiner Monday, March 01, 2010