Deloitte: Insolvencies rise but no major shake-out from pandemic and rising interest rates    

Accountancy firm forecasts there will be a total of 600 insolvencies through 2023, up from 568 insolvencies before the onset of the pandemic in 2019

The latest Deloitte figures show the services part of the economy posted the largest number of insolvencies in the first three months.

The number of company insolvencies has jumped in the first three months of the year, but there is no sign of a delayed wave of corporate failures following the pandemic and despite surging inflation and increased borrowing costs, according to Deloitte.      

The accountancy firm said it had tracked 146 corporate insolvencies in the Republic in the first quarter of this year, up from the 120 insolvencies in the same quarter last year, but which was down from 152 insolvencies in the final quarter of 2022. 

It now forecasts there will be a total of 600 insolvencies through 2023, up from 568 insolvencies before the onset of the pandemic in 2019, which suggests some of the dire warnings over Irish small firms facing successive crises will not be realised. 

"Recent levels of corporate insolvency activity would suggest we are getting back to pre-pandemic levels of activity," said David Van Dessel, partner in the financial advisory division at Deloitte

"However, taking 2019 as a previous norm, we are not yet seeing a material fallout from the economic impact of covid, or that of increased interest rates and current inflation," Mr Van Dessel said. 

Company restructurings, including examinerships and Scarps, or the Small Company Administrative Rescue Process, have doubled in the year, suggesting "directors of struggling SMEs now have a restructuring process that is bespoke for the SME sector”, he said.  

The latest Deloitte figures show the services part of the economy posted the largest number of insolvencies in the first three months. Financial services had 14 insolvencies, which included firms in consultancy, financial leasing, and accounting services, according to the figures. There were six fitness and beauty company insolvencies and five firms each in technical and professional services and property services that failed. 

A total of 21 construction insolvencies were recorded in the three months; 19 hospitality insolvencies were posted which compared with four firms a year earlier; and 16 retail insolvencies were posted, up from 10 retail insolvencies in the same period in 2022. Deloitte said manufacturing had 12 insolvencies and IT had nine insolvent firms in the recent quarter.