Number of companies going bust increases

The number of firms going out of business or seeking court protection in a bid to survive jumped 14%, to 347, in the last three months when compared to the first quarter of the year.

Despite the quarterly increase, however, overall yearly corporate insolvency figures are set to continue declining in 2014.

On a year-on-year basis, the first half saw an 8% fall in insolvencies, to 650 cases, according to data published by InsolvencyJournal.ie.

According to David Van Dessel of Deloitte — which recently bought the Journal and its owner, corporate restructuring consultant, Kavanagh-Fennell — the second-quarter figures show increases across a range of sectors, including construction, hospitality, manufacturing, IT, and wholesale.

Construction sector insolvencies grew, quarter-on-quarter by 14%, to 73, with a 33% rise in IT company failures, a 31% rise in insolvencies in the hospitality sector, and a 44% quarterly jump in the number of manufacturing firms going bust.

Regarding the classification of cases, the first half saw a 15% reduction in voluntary liquidations and increases in both court liquidations and examinerships.

However, voluntary liquidations jumped 30%, with examinerships up 60%. Receiverships were down by 12% on the previous three months and court liquidations fell by 17%.

Mr Van Dessel said that although more than half of construction firms expect to see their business grow this year, the jump in failures in the past three months is “worrying”.

However, overall, Deloitte still anticipates a continued reduction in corporate insolvency levels this year, with the pace of annualised declines in the first half likely to be typical for the full year.

“In particular, the new examinership legislation [which formally commenced yesterday] should result in the process becoming substantially more accessible to SMEs, and we anticipate an increase in examinerships during the second half,” Mr Van Dessel added.


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