Figures from business information firm Experian show that company liquidations in Ireland have more than doubled in 2008. There were 575 liquidations in 2008 compared to 273 in 2007, while there has also been a sharp rise in the numbers seeking protection from creditors by going into examinership. The grim outlook for Irish business was compounded by the number of companies going into receivership, which has also risen sharply.

According to Experian, there were 67 examiners appointed to companies during 2008 compared to just 25 in 2007 while receivers were appointed to 57 companies this year compared to just 15 in 2007.

“These figures speak for themselves and show clearly how the recession is affecting Irish business,” said Jim Kennedy, Head of Operations, Experian Ireland, who added that, not surprisingly, the construction, retail and transport sectors were the worst affected by the downturn.

And the indications are that the first quarter of 2009 will show no let up in the number of company failures, judging by the number of judgments registered against companies by their creditors, the number of creditors’ meetings that have been called and the number of winding-up petitions being submitted to the courts.

“The increase in the number of judgments being registered is a good indication of the number of companies in trouble who may subsequently fail. The number of judgments, winding-up petitions and creditors meetings is up some 50% year on year, but a more worrying figure is the 70% increase in the last quarter of this year. This would suggest that the first quarter of 2009 will show no let-up in the number of company failures and, if anything, there will be another sizeable increase in that period,” said Kennedy.

Overall during 2008, 922 judgments were registered against Irish companies, compared to 662 in 2007, but in the final quarter there 304 judgments registered compared to 171 in the final quarter of 2007, reversing the traditional trend of a reduction in registered judgments in the final three months of the year.

A total of 537 creditors’ meetings were called in 2008 compared to 291 in 2007 while 110 winding-up petitions were submitted to the courts this year compared to 67 in 2007.

“In our analysis last year, we commented that business was finding it more difficult to manage their cashflow, with all industries reporting slower payments and greater difficulty in collecting outstanding payments. Nothing has changed in that regard and if anything the situation has got worse. We now have the impact of the credit crunch with many Irish companies finding it virtually impossible to obtain credit from the banks. And even when credit is made available, the terms and covenants attached are penal,” said Richie Smith, Managing Director, Experian Ireland.

“It’s noticeable also that lawyers and accountants are reporting an increase in the number of company directors seeking advice on their obligations should their company get into difficulty. It’s also significant that the number of new companies being set up has fallen from 18,788 in 2007 to 14,755 this year and nearly as many companies are now dropping off the register as are being formed – this suggests a slide in entrepreneurial activity.

“All the indications are that things are going to get significantly worse in the coming year and we in Experian expect no slowdown in the rate of company failures. For those reasons, we believe it is crucial for companies to keep a strong hold on their cash flow and try and ensure that they obtain prompt payment on their invoices. Cash is going to be very much king in 2009,” Smith added.