Judgments for unpaid debt surge to €9.4m

COURT judgments (CJs) against companies for the recovery of unpaid debt continues to rise, with €9.4 million worth lodged in the third quarter of this year.

That represents an increase in value of 44% on Q3, 2008, despite a decline in the actual number of judgments from 671 to 499 for the period under review.

It brings the total value of judgments since the start of 2009 to a massive €27.3m, with 1,149 rulings lodged.

That compares to €16m for the first three quarters of 2008 and a total of 1,526 judgments. Construction accounted for the largest number at 37%, followed by hotels and restaurants with 15.2% and business activities with 11.8%.

The figures, compiled by ICC Information, show 10 out of the 17 industry sectors saw an increase in comparison to the same period in 2008, with the biggest increase in the community, social and personal services category.

Contrary to expectations, real estate and renting actually saw a decrease in judgments of 57% over the period.

The survey showed Leinster-based companies remain the biggest offenders with €5.2m in judgments, followed by Munster companies with €2.8m lodged in Q3 2009.

Dublin businesses accounted for the majority of rulings at 27.1%, down from Q2 of 2009 when they stood at 47.7%. Cork accounted for 17.2%, while Galway moved up to 3rd place with 5.8%.

Companies in Longford and Carlow were the lowest defaulters.

Comparing Q3 2009 against Q3 2008, the counties with the biggest rise in judgments against them were Wexford with an increase of 509%, Kerry which was up 300% and Waterford with an increase of 253%.

“CJs against companies are a useful barometer of corporate financial health and a leading indicator of insolvency,’’ Michael Gannon, head of business and account development at ICC Information.

In 2008 there was a total of €23.6m of judgments against Irish companies, but that figure has already been passed by the €27.3m reached in the first nine months of the current year, he said.

“If the trend continues, Quarter 4 looks set to be another difficult one making it even more essential to understand the credit history of the companies you are dealing with, and therefore decreasing your probability of incurring bad debt,’’ he said.