Company liquidations doubled in 2008

COMPANY liquidations more than doubled last year and may rise again this year.

A study from Experian found that 575 liquidations were recorded in 2008 in Irish firms compared with 273 in 2007.

Judgments against companies, winding-up petitions and creditor meetings jumped 70% in the fourth quarter, indicating that more liquidations are likely this year, it said.

“All the indications are that things are going to get significantly worse in the coming year,” said Experian Ireland managing director Richie Smith. “We expect no slowdown in the rate of company failures.”

According to Experian, there were 67 examiners appointed to companies last year compared with 25 in 2007, while receivers were appointed to 57 companies in 2008 compared with just 15 in 2007.

“These figures speak for themselves and show clearly how the recession is affecting Irish business,” said head of operations at Experian, Jim Kennedy, who added that, not surprisingly, the construction, retail and transport sectors were the worst affected by the economic downturn.

This year will show no let up in the number of company failures, considering the number of judgments registered against companies by their creditors, the number of creditors’ meetings that have been called and the number of winding-up petitions being submitted to the courts, Experian said.

“The increase in the number of judgments being registered is a good indication of the number of companies in trouble who may fail,” said Mr Kennedy.

Overall during 2008, 922 judgments were registered against Irish companies, compared with 662 in 2007, but in the final quarter there were 304 judgments registered compared with 171 in the final quarter of 2007, reversing the traditional trend of a reduction in registered judgments in the final three months of the year.

A total of 537 creditors’ meetings were called in 2008 compared with 291 in 2007, while 110 winding-up petitions were submitted to the courts compared with 67 in 2007.

“Business found it more difficult to manage their cashflow, with all industries reporting slower payments and greater difficulty in collecting outstanding payments,” said Mr Kennedy.

The number of new companies being set up has also fallen, from 18,788 in 2007 to 14,755 in 2008.