Corporate insolvency trends ‘grim but holding’

CORPORATE insolvency trends are “grim but holding”, with the 1,090 for the first eight months of 2011 up 7% on the same period last year.

The latest figures from InsolvencyJournal.ie show construction, retail and services industries continue to dominate insolvency statistics. However, a 104% rise in wholesale industry insolvencies versus January-August 2010 also stands out.

There was a 22% decrease from July’s 152 insolvencies to August’s 119, but Ken Fennell of kavanaghfennell, the firm that compiles data for InsolvencyJournal.ie, is slow to read positives into that figure.

“Any reduction is always welcome, but it has to be tempered by the fact that August is a quiet month. The legal profession goes quiet in August, so does the building sector. We saw the same drop this time last year. Overall, the annual total will be similar to last year, around 1,500 or 1,600. The numbers are historically high for Ireland. The picture is grim but holding, with similar levels to last year.”

However, there was a significant drop in receivership appointments during August, down to 17 from a high of 39 in July. However, when comparing year-on-year, there is a 16% rise in receivership appointments from 155 from January to August 2010 to 180 so far this year.

“Although the reduction in the number of receivership appointments is welcome, we believe the banks and NAMA will continue to appoint receivers where they believe they have no alternative and they are of the view that such appointments will lead to greater recoveries. The recent outcome of the Start Mortgages case could also have some implications on future receivership appointments,” Mr Fennell said.