Companies folding at rate of four a day

A TOTAL of 917 companies went bust in the first seven months of 2010 as the impact of the recession continued to hit businesses hard.

Four companies a day went out of business, the InsolvencyJournal.ie has reported.

Already the number of corporate failures to the end of July has exceeded the total for the whole of 2008, when 773 firms went to the wall.

This year’s figure for company collapses is also ahead of last year’s full-year figure.

Construction, services, hospitality and retail account for almost three-quarters of all company failures in 2010.

July was a bad month for receiverships, also suffering the highest monthly total since the beginning of the downturn.

The number of receiverships was up by 142% during the period, the report said.

Those numbers continued to rise in July, with 25 companies affected, the highest monthly total since the beginning of the current economic downturn.

So far, 143 companies went into receivership between January and July 2010, more than last year’s total of 124.

Commenting yesterday, Tom Kavanagh, a partner with Kavanagh Fennell, said: “While there was a minor dip in insolvencies this month (July), the general perception is that there is a backlog of distressed cases and insolvencies are likely to increase during the second half of the year.”

Of the total number of insolvencies, the highest number so far was in Dublin at 373.

Construction was the worst affected area nationally as subdued private sector activity and a reduction in capital spending continued to undermine firms.

Some 277 construction firms have gone out of business to date, close to one third of the total.

Services were second in line at 169, an increase of 17% over the same period last year.

The hospitality business also continued to be hit hard due to weak demand with 117 failures chalked up by the sector in the seven months.

Over-supply of rooms, reduced corporate demand and the downturn in consumer spending resulted in more receivers being appointed to an increasing number of properties.

Leinster took the brunt of the hits with the appointment of a receiver.

Retailers continue to suffer, with closures remaining on the increase, bringing to 114 the number of collapses in the seven months.

In the motor trade the numbers going bust were higher than expected given the success of the Government’s car scrappage scheme.

The Society of the Irish Motoring Industry (SIMI) revealed in May that sales of new cars in the first five months of the year were up 41%.

It credited the scheme for the boost in sales, but despite the sharp improvement reported for car sales 28 companies went out of business, just two less than the same period in 2009.

Low levels of examinerships continue to be recorded in 2010 and not a single company entered court protection last month. Examiners have been appointed to just nine companies this year, compared to 21 in 2009 and 15 in 2008.