Deloitte: Small number of business failures so far but lockdown will hit struggling firms

There were 575 company insolvencies here last year, little changed from the 568 in pre-pandemic 2019 but the landscape is likely to worsen.

The number of business failures or insolvencies has so far increased by a small amount during the Covid-19 pandemic, but the latest lockdown will mean many more firms will struggle to survive, according to Deloitte.

There were 575 company insolvencies here last year, little changed from the 568 in pre-pandemic 2019, as Government subsidies and tax relief and warehousing of company debt, as well as aid for household incomes helped support the economy, it said. 

However, the landscape may likely worsen, said Deloitte partner David Van Dessel, as the latest lockdown bites. 

“It is clear that 2021 will pose significant challenges for companies, particularly as we have entered a higher level of lockdown since January," he said. "This will have an impact on companies and their ability to survive.” 

Deloitte said struggling companies have also been helped by a move last August to bolster companies' protection from their creditors. The level was raised to €50,000 from €20,000 at which creditors can trigger a winding-up petition.

“In addition to Government supports, many struggling companies continue to receive support from their banks, landlords, and trade creditors, as the uncertainty caused by the pandemic has resulted in high levels of creditor forbearance," Deloitte said. 

"Furthermore, the Office of the Director of Corporate Enforcement has confirmed that it will have due regard to the impact of Covid-19 on companies who entered insolvency during the pandemic," it said. 

In 2020, services firms, including financial services, accounted for the largest number of company insolvencies. Company insolvencies in services also included failures among health, and fitness, and beauty firms. Other experts said it could be late into 2022 before the full corporate toll from the Covid-19 crisis will be fully shown in the figures.