Almost 400 firms fold during Q3

Nearly 400 companies effectively went bust during the third quarter of this year — a slight increase on the same period last year, but a significant decline on a quarter- by-quarter basis.

Fresh data from corporate recovery firm, Kavanagh Fennell shows 395 corporate insolvencies occurred between the beginning of July and the end of September, with the construction industry remaining the worst affected sector.

However, when measured against the same quarter last year, 7% fewer construction firms went to the wall; while the retail industry — with 49 insolvencies — showed a 4% year-on-year increase in cases.

Despite the level of business failures remaining high, the new figures do offer some positivity.

On an overall basis, the third quarter figure was up by 1% on a year-on-year basis; but down by 13% on the 454 insolvency cases reported for the second quarter of 2012.

Ken Fennell of Kavanagh Fennell said the hope is that the figures, while not significantly reducing, have plateaued. “Perhaps one positive we can take from the quarter two to quarter three decline is the possibility that the volume of insolvencies may have flattened out and although we don’t expect to see any significant decline in the figures, the totals look to have peaked,” he said.

Also of positive note is that the 112 insolvency cases measured in September was the lowest monthly total recorded this year.

However, conversely the total number of insolvencies for the first nine months of the year — 1,282 — marks a 6% annualised increase on last year.

Nearly a quarter of all cases, for the third quarter, were made up of receiverships — which totalled 91 and were up by 34% year-on-year.

The number of liquidations, for the period, amounted to 299, 18% down on the preceding quarter mainly due to the summer recess for the courts.

An increase in examinerships is anticipated in the final few months of the year, according to Mr Fennell. “The large number of companies opting for voluntary liquidation is an indication of how difficult some SMEs are finding the current trading environment,” he said.

“Changes to Government legislation to reduce the cost of examinerships could open the process to small companies and help to protect an insolvent trading business with a reasonable prospect of survival.

“This would, in turn, allow the business to continue to trade and restructure; preserving employment and work in progress, as well as delivering a better return to creditors than would be the case in a winding up,” he said.