Insolvency rise expected despite 20-month low

DESPITE insolvency figures falling to their lowest rate in 20 months, a substantial increase in the number of firms collapsing is expected in the final months of this year.

More than 1,000 firms went out of business between January and August this year, up 14% on the same period last year.

However, the number of insolvencies dropped dramatically in August, falling from 125 in July to 95. This was the lowest monthly total so this year and the lowest since January 2009.

Despite this, kavanaghfennell, the company that compiled the statistics, expects insolvencies to show a “substantial increase” in the last three months of the year.

Dublin recorded the highest number of insolvencies with 414 failures for the year-to-date while Carlow recorded the lowest with just two companies.

Partner with kavanaghfennell, Ken Fennell, said the decrease in insolvencies in August could be due to a traditional seasonal slowdown in August.

“Insolvencies are likely to increase again in the final quarter of 2010 in line with the 2009 trend. Based on our analysis we expect the last quarter to show a substantial increase in the number of insolvencies,” he said.

In the year to the end of August examiners have been appointed to just nine companies, compared with 24 in 2009 and 18 in 2008.

On a positive note, the rate of failures in the construction sector appears to be slowing, but 309 construction firms still collapsed in the first eight months of the year.

“There are definite signs that the construction sector is close to the bottom. The number of insolvencies in the sector is not increasing as rapidly as in 2009 “, said Mr Fennell.

Insolvencies in the hospitality trade increased with 128 failures recorded so far this year, up 27% on the same period last year.

The decline in the retail sector appears to have reached the floor. Some 124 firms have gone bust so far in 2010 – the same as the equivalent period last year.