Insolvencies jumped 82% in 2009

THE number of Irish companies going insolvent increased by 82% in 2009, but fewer companies are going the examinership route in a bid to trade out of their difficulties.

Statistics compiled by InsolvencyJournal.ie for the last year shows the number of insolvencies increased rapidly – in particular in the construction, services and retail sectors – and the company predicts a similar number of insolvencies in 2010.

In total, 1,406 companies collapsed in 2009 – an average of almost four companies a day going bust.

There was a dramatic 40% drop in the number of examinerships compared to 2008, with only 37 companies applying for court protection during the year. The 2008 figure was inflated by the 13 Thomas Read Group companies that were granted court protection that year.

Ken Fennell, from InsolvencyJournal.ie, said the drop in examinerships could also be attributed to demands from the High Court for higher standards in the examinership process.

“Earlier this year, Mr Justice Peter Kelly called for more detail in the independent accountant reports that are presented at an examinership hearing, as fewer companies successfully emerge from the process. Companies could also be wary of the process following the Supreme Court’s refusal to grant protection to six companies in the Zoe Group controlled by property developer Liam Carroll,” he said.

Things went from bad to worse as the year progressed. There were 82 insolvencies in January, rising to 132 in June and hitting a monthly high of 156 in December.

The construction industry was by far the worst-affected sector, with 453 construction companies declared insolvent, representing, more than 30% of the year’s insolvencies. Insolvencies in the sector dipped in November, the number of construction companies going bust peaked at a year-high figure of 49 in December.

“The services sector was the next hardest hit with 278 insolvencies – almost 20% of the total. 201 companies in the retail industry collapsed, reflecting the impact on consumer spending, while a high numbers of insolvencies were also recorded in the hospitality (154) and manufacturing (123) sectors.”

A total of 37 companies were placed in examinership in 2009.