Insolvencies hit new high in July

MORE firms went out of business in July than any month previously, with the construction and motor sectors particularly hit.

According to figures from the InsovencyJournal.ie, part of the surge in insolvencies was because of the high court recess in the summer, with “a glut of cases arriving in court before the break”.

The construction sector was particularly badly affected as 151 firms became insolvent, a 33% increase on June figures and 132% surge on the same month last year.

One of the reasons for the spike in construction firms going out of business may have to do with firms going into liquidation before and during the standard two-week period of builders’ holidays, which traditionally occur in the last two week weeks of July.

The financial strain of having to pay three week’s wages in advance of the holidays would have been the final nail in the coffin for already financial struggling construction firms, it said.

Another reason for the spike, it added, could be a strategic move by the firms to take advantage of the traditionally quiet period to go into liquidation under the radar and go unnoticed.

It was also a terrible month for the motor trade which saw a 200% increase on last month. Nine motor firms went out of business in July compared with three in June and four in May.

The numbers of Irish firms going out of business shows no sign of abating, according to the InsolvencyJournal.

Editor Larry Ryan said: “The July figures make particularly depressing reading after some respite last month. There is an overall increase of 33% in Irish corporate insolvencies compared to June.

“Construction has really taken a beating again, while there have substantial increases in insolvencies in the motor, manufacturing and retail sectors.”

There were 30 retail insolvencies during the month, up nearly 50% from June’s tally of 21 and nearly triple May’s 11.

Already this year 131 retail companies have gone out of business.

There was slightly better news in the hospitality sector, where 14 insolvencies was consistent with 13 in June and 15 in May.

Examinerships were well up in July as 14 firms sought court protection during the month compared with three in June and one in May.

Mr Ryan said: “For a while, examinership seemed to be falling out of favour, with less new investment out there and stricter demands from the high court.

“However, the aggressive pursual of developers by ACC Bank has played its part in swelling July’s examinership figures.”

Overall the number of corporate insolvencies this year is up 132% compared with the same period last year and up 339% on 2007.