Figures released today by
InsolvencyJournal.ie reveal that insolvencies increased by over a fifth for the
first seven months of the year and are up 150% on the 2008 figures. Four Irish
companies a day went bust in the first seven months of the year and the number
of corporate failures so far this year has already exceeded the yearly total for
the whole of 2008 when 773 failures were recorded.
A total of 917 companies collapsed between January and July of this year, up 22%
on the 2009 figure of 754. The number of Insolvencies dipped slightly in July,
falling from 132 in June to 125 this month. Dublin recorded the highest number
of insolvencies so far this year, with 373 failures for the year-to-date.
Construction was once again the
worst affected as subdued private sector activity and a reduction in capital
spending continued to cause problems for the sector. 277 construction firms
collapsed between January and July 2010, 30% of the total, and up 11% compared
to last year when 249 insolvencies were recorded. The services sector recorded
the second highest level of insolvencies with 169 in the first seven months of
the year. This represents an increase of 17% compared to the same period last
year when 144 company failures were recorded.
Insolvencies in the hospitality
trade also increased with 117 failures recorded so far this year, 13% of the
total. Over-supply of rooms, reduced corporate demand and the downturn in
consumer spending are leading to receivers being appointed to an increasing
number of properties. The Leinster area appears to be the worst affected with
the appointment of a receiver to the Osprey Hotel and Spa last week which
brought to eight the total number of hotels which have entered receivership in
the area in recent months.
In July, a receiver was appointed to Jim Mansfield's Citywest Hotel and Golf
club, and Finnstown House, both of which are in Lucan, West Dublin. ACC Bank and
Anglo Irish Bank seized control of two sister hotels, the Heritage Golf Hotel
and Spa in Killenard, Co. Laois and the four-star Portlaoise Heritage Hotel,
both of which are owned by Laois developer Tom Keane. Receivers have also been
appointed to the Johnstown House Hotel & Spa in Enfiled, Co Meath, the four-star
Killeshin Hotel in Portlaoise and the €60 million Moyvalley hotel and golf
resort in Co Kildare.
Retailers are also continuing to experience significant difficulties, with
insolvencies in the sector increasing for the third consecutive month. 114
companies in the sector collapsed between January and July, an increase of 10%
on the same period in 2009.
Insolvencies in the motor trade are still higher than expected given the success
of the government scrappage scheme which was introduced last December. The
Society of the Irish Motoring Industry (SIMI) revealed in May that sales of new
cars in the first five months of the year were up 41% on the same period last
year and attributed the increase to the scrappage scheme. Despite the rise in
sales, however, 28 companies in the sector went out of business in the first
seven months of the year, only two less than the same period in 2009.
Overall, the new figures reveal that companies operating in the domestic market
are continuing to suffer. Construction, services, hospitality and retail –
traditionally domestic sectors – accounted for almost three quarters of all
insolvencies with one in three failures occurring in the construction industry.
Commenting on the statistics,
Tom Kavanagh, a partner with Kavanagh Fennell, said:
"While there was a minor dip in insolvencies this month, the general perception
is that there is a backlog of distressed cases and insolvencies are likely to
increase during the second half of the year."
Overview of Insolvency Journal
statistics for July and year to date:
Construction = 41 (year to date, 277)
Services = 20 (year to date, 169)
Hospitality = 15 (year to date, 117)
Retail = 18 (year to date, 114)
Motor = 6 (year to date, 28)
Manufacturing = 4 (year to date, 68)
IT = 7 (year to date, 35)
Transport = 3 (year to date, 28)
Wholesale = 4 (year to date, 21)
Other = 7 (year to date, 60)
Export-led sectors such as
manufacturing, wholesale and transport, however, are holding up well. Tom
Kavanagh noted that "These industries accounted for just 13% of failures in
the first seven months of the year, while manufacturing failures dropped from 10
in June to just 4 in July,"
The number of receivers appointed to indebted companies continues to rise in
July with 25 companies entering receivership, the highest monthly total since
the beginning of the current economic downturn. 143 companies entered
receivership between January and July 2010, up 142% on the same period last year
and surpassing the yearly total for 2009 when 124 receivers were appointed. In
addition the receivership totals do not include personal asset receiverships as
no public record is available. Low levels of examinerships continue to be
recorded in 2010 and not a single company entered court protection last month.
So far this year, examiners have been appointed to just nine companies, compared
to 21 in 2009 and 15 in 2008.
Today's report says although fewer companies are entering court protection this
year, the success rate is improving. Of the nine companies which have entered
examinership so far this year, only one has failed (Future Print), while a
number of high profile firms such as Irish Car Rentals and Jackie Skelly Fitness
have avoided liquidation through court protection.
There are two main reasons for the low levels of examinerships at present,
according to Tom Kavanagh: "The tougher regime in the courts and the lack of
investment capital available for distressed companies is putting many companies
off applying for examinership."