Insolvencies to slow in 2011

COMPANIES have gone bust at a rate of four a day from January through to September, but we can expect more positive statistics by late 2011, according to one leading accountancy practice.

Some 1,132 companies have gone out of business in the nine months to September 2010, said Ken Fennell, a partner in the KavanaghFennell practice, which compiled the data for the latest InsolvencyJournal.ie report. While these figures are bad, they’re comparable to last year.

Ken Fennell said: “The rate of insolvencies is bad, but it is not an increase. It is the same as last year. There is a bottoming out of the figures. Forty-six construction companies closed in February, 42 in September. The figures haven’t raised, and the number of examinerships are significantly down. The situation is bad, but it is not as bad as it could be. It will be middle to late 2011 before we see the kind of slowdown in the rate that would create any general positive sentiment.”

Construction continues to be the hardest hit industry, with 351 construction companies closing down so far this year. Receivers were appointed to 18 companies in September.

Regionally, Ulster and Munster were hit hardest. In Ulster, the number of insolvencies rose from just one in August to nine in September. In Munster, the number rose from 12 insolvencies in August to 26 in September.

Overall, the rate of closures increased by just 12.5% on the same nine-month period last year. The first six months of 2010 were the worst. Third quarter insolvencies were actually down on the same period last year, 340 versus 381.

Ken Fennell added: “The numbers for the entire year look as if they will be up slightly on last year. We’re probably looking at somewhere around the 1,500 mark. The figures show that the trading environment is still challenging for businesses, but there is some sort of stabilisation taking place.”

Also hit hard this year were the services industry (207 so far this year), retail (140), and hospitality (143).

There was good news in the IT industry, where there was a fall in the level of insolvencies, with just one in September, down from three in August, seven in July and six in June.