MORE THAN FOUR Irish companies went out of business every day in the first month of this year – an increase of 39 per cent on the same period last year, according to newly released figures.
In total, 135 companies went into insolvency in January and the number of receiverships increased by 33 per cent from the previous month. The services industry most badly affected, accounting for 32 per cent of the overall figure of insolvencies – a 61 per cent increase from December’s total.
A proportion of the insolvencies in the services industry can be “linked directly” to the construction industry be badly hit, according to InsolvencyJournal.ie. Some 35 corporate insolvencies in construction were recorded during the month.
Regionally, Leinster was the worst-hit area, representing 66 per cent of the overall total number of insolvencies.
Commenting on the figures, Ken Fennell partner with Kavanaghfennell, the firm who compiled the data, said that the overall increase in total when compared to the same period last year was “not surprising” considering continued weak consumer sentiment as a result of the harsh budgetary measures introduced in the latter half of last year.
Despite the rate of insolvencies in January, Fennell said some positive developments could be expected later in the year. ”We predict there will be a fall-off in the rate of construction insolvencies to be offset by a rise in other sectors, in particular the retail and hospitality sectors’,” he said.
Creditors’ voluntary liquidations accounted for 60 per cent of all insolvencies for the month, while examinerships accounted for 5 per cent of the overall total. Seven petitions were lodged in the courts, which could indicate that the Revenue Commissioner is taking a harsher stance on non-tax compliant companies, InsolvencyJournal.ie said.
Fennell said that further examinerships were expected during 2012 “as trading companies struggle under on-going pressure, and larger distressed companies may attract interest from foreign investors with capital”.
The report welcomed the new Personal Insolvency Bill, due to come into effect in March, which it said would “change personal insolvency in Ireland and will begin to deal with the issue of unsustainable personal debt”.
The Bill, being introduced following a requirement laid down by the EU and IMF as part of the Ireland’s bailout package, will follow the recommendations contained in the Law Reform Commission Report of December 2010 which proposes an automatic discharge from Bankruptcy from 12 years to three, providing that strict conditions are met.