FIVE IRISH COMPANIES went out of business every day on average last year – or almost 170 a month, new figures show.
A total of 1,930 firms collapsed between January and December 2011, according to business analysis service Vision-net. This was a 20 per cent increase on the same period in 2010.
Between them the companies left unpaid and unsecured debts of almost €1.2billion – debt which is likely never to be repaid and which could drag other struggling businesses towards the red.
“Short-term unsecured creditors are still owed €1.19 billion which has serious knock-on effects for business cash flow, employment and consumer sentiment,” Vision-net managing director Christine Cullen said.
However the figures also showed an increase in the number of new companies being registered. A total of 14,439 new firms were incorporated in 2011, up five per cent on 2010.
But there were worrying signs of further difficulties ahead, especially in the hospitality sector. According to Vision-net, just over 60 per cent of 5,000 companies analysed in the hotel and restaurant sector were deemed “high-risk”.
Hospitality firms accounted for nine per cent of all business failures in 2011.
There were also risks in the retail and motor trades, where around half of the companies analysed were “struggling to stay solvent”.
“Our figures also show that companies in the hospitality and construction sectors have been hardest hit as discretionary spending in the economy slows significantly and the property market continues to contract,” Cullen said.
“Corporate insolvencies have risen by almost one-fifth over the same period last year but the number of newly created companies is marginally up on last year showing that entrepreneurship remains a strong trait in the workforce.”