Business insolvencies up 25% compared to last year

Figures released today show a 25% increase in business insolvencies in the first quarter of 2010 compared to the same period last year, up from 320 to 402.

The number of firms that failed in Q1 2010 (402) increased by approximately 200% when compared to the same period in 2008 (137).

Commenting on the by InsolvencyJournal.ie findings, Ken Fennell of Kavanagh Fennell, said: "Corporate failures for Q1 2010 remain largely on a par with the figures for Q4 2009 with 402 companies failing so far this year, compared to 403 in the last three months of 2009.

"The latest figures however, underline how the ripple effect of the economic downturn is permeating sectors that had previously recorded relatively low numbers of insolvencies. For example, IT failures jumped by 200% from, 5 to 15 in Q1 2010."

The worst-hit region was Leinster, accounting for 65% of total insolvencies in Q1 2010, while Ulster and Connaught were the least affected with 5% and 9% respectively. Munster accounted for 21% of insolvencies.

Dublin recorded the highest number of corporate failures in the first three months of the year with 168 insolvencies, or 42% of the national total, while Cork recorded the second highest number with 31 insolvencies.

The first quarter results for 2010 show the number of construction companies entering insolvency declining.

There were 124 company failures in Q1 2010, compared to 125 in Q4 2009 and 122 in Q3 2009. The numbers are still however, significantly higher than the figures for the first half of the year which saw 116 and 90 insolvencies in the industry during Q1 and Q2 of 2009 respectively.

Insolvencies in the services sector were down 20% on Q4 2009, while retail failures dropped from 62 to 56.

The car scrappage scheme introduced in the December 2009 budget appears to have had a positive initial impact with the motor trade experiencing an improvement in Q1 2010, with five insolvencies in the first three months of the year compared to nine for the same period in 2009.

The first quarter of 2010 brought with it a spate of high-profile receiverships, Bank of Ireland appointed a receiver to two firms in the Tweedy group, Hughes and Hughes went into receivership, AIB and KBC bank installed a receiver over more than 300 apartments in the insolvent Fleming Group, and a receiver was also appointed by Zurich Bank to the insolvent Residence private members club.

The latest figures reflect the flurry of receivership activity with 60 receivers appointed in Q1 2010 compared to 35 in Q1 2009 – an increase of 71%.

Examinership figures stayed static with six companies granted court protection in Q1 2010 compared to the same figure in Q4 2009.