More firms failing than being set up

FOR the first time in six years more businesses failed than were created in a six-month period.

Research conducted by services firm, Experian shows 6,691 companies collapsed in the first six months of this year.

However, the number of new company registrations was a fifth lower than a year earlier, dropping to 6,627 from 8,207.

The research shows that there has been a dramatic increase in the number of bank-appointed receivers to companies in difficulty and a significant increase in the number of companies seeking protection from creditors by filing for examinership.

With figures hitting 523, more companies went into non-members-voluntary liquidation than in any other period on record since Experian first began recording its business statistics in 1998.

It said 79 companies were placed in receivership, compared to 21 in the first half of 2008.

Also 53 companies sought protection from creditors by filing for examinership. This compares to 19 in the same period in 2008.

It also said 527 companies held creditors’ meetings, 700 had judgments registered against them and 77 companies were subject to a winding-up petition.

Head of operations at Experian Ireland, Jim Kennedy said: “The effects of the global recession continue to cut deeply into Irish business. In the current climate, cash is king.

“Reducing the risk of bad debts is critical for any company. We recommend that businesses use as wide a variety of business information tools as possible to create an early warning system to alert them to customers or suppliers heading into difficulties.”

Figures released recently by insolvencyjournal.ie found that the number of firms that will collapse this year will hit levels never before seen in the State.

Liquidations for the first six months of this year are already 318% up on 2007 figures, according to insolvencyjournal.ie, which notes there are now 27 insolvencies a week in Ireland. If the figures continue on the same trend for the next six months, the number of insolvent liquidations for 2009 will be more than double the record figure for 1994.

Separate figures released by ICC Formations found there was a surge in the number of firms established in the telecommunications, health and social sectors in the first three months of the year.