170 companies folded every month in 2011

APPROXIMATELY 170 Irish companies went bust every month in 2011, a new report shows.

Latest insolvency figures — published yesterday by business intelligence analyst, Vision-net — cover the first 11 months of 2011 and show that, during that timeframe, 1,930 Irish companies “failed” or went out of business; 20% more than was the case for the same period in 2010.

Last year’s failed companies also left behind almost €1.2 billion in unpaid unsecured debt, according to Vision-net.

Of 2011’s cases, 73% were liquidations, 26% were receiverships and 1% were examinerships.

Due to the ongoing drop in consumer spending and the continued contraction of the property market, hospitality and construction were the worst hit business sectors.

In total, 181 companies in the hospitality sector were closed, during the period, accounting for 9% of all business failures. Of the 5,000 hospitality-related firms surveyed, over 60% were deemed “high risk”.

But while, in total, an average of five companies went out of business every day between January and November; nearly 15,000 new firms were incorporated over the same timeframe — 5% more than a year earlier — a trend, which the survey’s authors say shows that “entrepreneurship remains a strong trait in the workforce”.

Experts, however, are not overly confident about the prospects of any wholesale reduction in business failures over the coming year.

“Consumer sentiment remains weak, as unemployment rises and salaries drop against continuing turbulence in the global economy,” according to the Vision-net managing director, Christine Cullen.

“In a move that is likely to thwart economic recovery, short-term unsecured creditors are still owed €1.19bn, which has serious knock-on effects for business cash flow, employment and consumer sentiment,” she added.

Late last week, Ken Fennell of Kavanagh Fennell, corporate recovery specialists and owners of Insolvencyjournal.ie, said that 2012 is likely to be another “very difficult year“, with the retail and hospitality sectors, in particular, likely to see “a significant number of failures” and the year, as a whole, showing more overall failures than in 2011.