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News : Irish Last Updated: Jan 4, 2011 - 12:11 AM

Over 1,500 Irish companies were declared insolvent during 2010; Process of court examinership fell
By Finfacts Team
Jan 4, 2011 - 12:05 AM

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Over 1,500 Irish companies were declared insolvent during 2010 according to the statistics complied by insolvencyjournal.ie - -  an increase of over 8% on the 2009 total. The process of court examinership fell.

Commenting on the figures, Ken Fennell, a partner with kavanaghfennell who compile the data said “2010 saw no let up in the number of businesses becoming insolvent, although the increase on the 2009 figure is not as bad as some had predicted.”

The construction sector was again the hardest hit with 472 Companies or 30% of the total going collapsing bust in 2010. Among the big names were the Fleming Group, Pierse Contracting and McInerney Group.

The services sector with the majority of firms, including architects and quantity surveyors tied to the property industry, was the second highest for failures.

There were 279 insolvencies accounting for over 18% of the total.

The hospitality sector with its many struggling hotels, lost 194 in the year, including The Residence Club, Tweedy Group, City West Hotel, Johnstown House Hotel and Killeshin Hotel.

Fennell said this sector will continue to experience difficult trading conditions during 2011 and he expects more casualties throughout the year.

Retail lost 177 companies in the year. However, in addition there were sole trader and partnership failures, of which there are no official statistics available. Fennell said the number of retail failures are considerably higher than the 177 reported cases. Some high street names that collapsed during 2010 include Hughes & Hughes, Pulse Accessories, Vera Moda and Four Star Pizza. He also said 2011 will be a very challenging year for retail the harsh weather conditions in the run up to Christmas together with the general lack of consumer confidence and the ever increasing volume of online trading could force many more retailers out of business.

Geographically Leinster accounted for over 65% of all insolvencies, with Munster accounting for 21%, Connaught 9% and Ulster just 5%.

The data shows a surge in the number of receivers being appointed with the banks appointing 225 receivers during 2010 in comparison to 124 in 2009 and just 57 in 2008. Fennell said this trend will continue during 2011 as the banks and State toxic property loans agency, NAMA, try to recover what they can from failing companies. In addition there was a significant number of personal asset receiverships throughout 2010 but with no official figures available Fennell believes that this may be more that double the amount of corporate receiverships.

The end of 2010 saw the first NAMA appointed receivers and Fennell says this will be a common practice over the next number of years.

Court appointed liquidations which are primarily instigated by the Revenue Commissioners showed a small decline - - down from 106 in 2009 to 93 in 2010 and this may indicate a softening of Revenue attitude towards struggling companies.

The most dramatic decrease in 2010 was the number of companies seeking protection from creditors by placing the company in examination. A total of 16 companies went into examination compared to 37 in 2009, a decrease of 57%. Fennell said not all the companies have successfully emerged from the process and  there were some very high profile examination failures including The Residence Club, The Tweedy Group and Pierse Contracting. The low number of companies entering examinership is a reflection of the difficulty in negotiating a successful path through the process. However, he says there have been some notable successes including Aer Arann, Best Seller and Jackie Skelly.

Commenting on the outlook for 2011 Ken Fennell said
“2011 will again be a very difficult year for Irish businesses and particularly the retail and hospitality sectors will see a large number of failures", however he also believes the overall number of insolvencies has probably peeked and does not expect total company failures in 2011 to be above the 2010 figures."

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