The number of Irish firms going out
of business fell 28% in January 2011 compared with December, with 3 companies
per day folding.
Regionally the worst hit area was Leinster, accounting for 68% of the overall
total; construction continued to be the worst affected industry, accounting for
24% of the overall total; creditors’ voluntary liquidations accounted for 88% of
all insolvencies for January.
Data released today by
InsolvenyJournal.ie show that the January figure of 96, is a drop of 28% when
compared to December 2010 totals and is a 13% decline on the same period last
Commenting on the figures, Ken Fennell, a partner with kavanaghfennell, the firm
who compile the data said “While the reduction in insolvencies both from
December and year on year comparison is welcome news, it is a little early to
predict if the rate of insolvencies have peaked and it will be interesting to
see the figures for the first quarter of 2011 in comparison to 2010.”
Beyond Leinster, Ulster and Connaught were the least affected with 4% and 8%
respectively while Munster accounted for 20%. This regional split has continued
from 2010 trend which saw yearly insolvencies split as follows; Leinster 65%,
Munster 21%, Connaught 9% and Ulster just 5%.
With regard to industry totals, construction continued to be the worst affected
with 24 insolvencies or 25% of the overall total, however this is a dip on
December which saw 40% of insolvencies in the construction sector. The
manufacturing industry also saw a drop from 10 insolvencies in December to 3 in
January, down from 8% to 3% of the total. The hospitality industry had 15 or 16%
and retail 9 or 9% which stayed relatively level with December figures of 16 and
9 respectively. It's expected that there will be a fall-off in the rate of
construction insolvencies to be offset by a rise in other sectors.
Fennell says “We would expect a possible increase in the number of
insolvencies in both the hospitality and retail sectors over the coming months.”
Creditors’ Voluntary Liquidations accounted for 88% of all insolvencies for
January while there were no Court appointed liquidations. However, January saw
two applications for Court protection granted by the High Court, with CB Deli
Limited and Cantec (North East) Limited both entering examinership during
January. Meanwhile, a decision in the McInerney Homes case is still outstanding.
During 2011, kavanaghfennell expects that examinerships will increase as trading
companies struggle under ongoing pressure, and larger distressed companies will
attract strong interest from foreign investors with foreign capital and although
the figures show a drop in the number of receivers appointed during January,
(with a 47% decrease compared with December and 57% when compared with January
2010) the firm does not anticipate this trend to continue during 2011 and would
expect a return to 2010 levels of receivership activity.