The first three months of 2015 have seen a 17% year-on-year decrease in company failures.
However, statistics from Deloitte also show the 250 cases of corporate insolvency for the first quarter are up 13% on the final quarter of 2014. Despite the introduction of legislation making it more cost-effective for smaller firms to go down the examinership route if in need of court protection to safeguard their business, receiverships accounted for 22% of all insolvencies since the start of January, unchanged on the same period last year.
“An ongoing trend that we are observing in our analysis over the last number of quarters is that examinerships continue to remain at disappointingly low levels,” saod David Van Dessel of Deloitte’s restructuring services division.
“Take-up is consistent with the comparable periods and shows the introduction of new legislation, in early 2014, has not had the anticipated effect of encouraging more struggling SMEs to avail of this more cost-effective and accessible option.
“It is very disappointing to continue to observe the severe under-utilisation of the examinership process in this country. I strongly believe that we, as a business community, need to adopt the corporate rescue packages that the Government has provided and to turn the tide on liquidation and receivership.
“Delayed action by directors could be a major contributor to the low take up of examinership and I would urge directors of companies, facing financial difficulties, not to hesitate in seeking professional assistance, as leaving it too late severely reduces the chances of achieving a positive turnaround. The benefits of acting early cannot be over-estimated.”
Currently fewer than one in 50 Irish corporate insolvency cases concern examinership, which compares to one in seven in Britain and one in three in the US.
Mr Van Dessel said there is “a strong need” to change that statistic and “move away from the high levels of liquidations”, which dropped from 24 to 13 year-on-year in the first quarter.
Company failures in the building sector remain pronounced, with 191 insolvencies noted in the first quarter.
© Irish Examiner Ltd. All rights reserved