Four companies go bust every day

FOUR companies a day went out of business in the first seven months of this year.

New insolvency figures show that July saw a 9% increase in the number of company failures when compared with June; with 152 companies going bust.

InsolvencyJournal.ie also recorded a total of 971 failures for the first seven months of the year. The latter figure represented a 6% year-on-year increase.

“We’re not surprised by the continuing high levels of insolvencies, as weak consumer sentiment and the ongoing financial uncertainty in the eurozone continue to have an adverse effect on business,” said Ken Fennell of Kavanagh-Fennell, the largest specialist insolvency practice in Ireland and the compilers of the data.

“Banks and NAMA are continuing to take enforcement action in an attempt to maximise recoveries and we believe this trend will continue over the next 12 to 18 months. Overall, insolvencies remain stubbornly high and our predictions for the year remain that there will be approximately 1,600 insolvencies during 2011.”

There were 39 receivership appointments last month, a significant increase on the 19 recorded in June. July also saw a 59% monthly rise in insolvencies in the construction sector, which has suffered 254 company failures so far this year, accounting for 26% of all insolvencies for the year, while the retail industry fared well with a 48% decrease, from 25 in June to 13 in July.

Meanwhile, new data from statistical providerVision-net.ie shows that 15% of all companies that went out of business last year owing money are now back trading as so-called ‘phoenix companies’ — those which emerge from the collapse of another firm, through insolvency.

Vision-net claims that 578 “phoenix” companies are now trading in Ireland.

While permitted under law, the negative impact of the existence of “phoenix” companies is that existing creditors of the business the company replaced can’t reclaim their debts and the new firm can engage with new suppliers, thus risking a repeat of business failure and unsatisfied debts.

“The figures show that while new companies are still being incorporated, trading conditions remain very challenging for most businesses as demand continues to wane,” Christine Cullen, managing director of Vision-net.ie, said.