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News : Irish Last Updated: May 3, 2011 - 7:18 AM

Total of 558 Irish corporate insolvencies in January/ April 2011; Rise to continue as NAMA and banks target developers
By Finfacts Team
May 3, 2011 - 6:00 AM

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New statistics released by InsolvencyJournal.ie reveal that April evidenced no respite in the number of Irish corporate insolvencies, with 162 appointments recorded during the month. The total number of corporate insolvencies for January/ April 2011was 558 - - an increase on the same period last year of 3%. The rise is expected to continue as the State toxic property loans' agency, NAMA and banks target developers.

It's surviving companies that bear the brunt of insolvencies and after 3 years of recession and well-off armchair commentators advocating unilateral sovereign debt default, as if a credit freeze would not matter, many SME companies must be at a tipping point.

2,900 companies collapsed in 2009 and 2010 plus sole traders and partnerships, leaving debts for other Irish companies.

April saw a marked increase in both Creditor’s Voluntary Liquidations (21% increase on March) and Receivership appointments (55% increase on March), a trend which is expected to continue.

Commenting on the figures, Ken Fennell, partner with Kavanaghfennell, the firm which compiles the data, said:
“Figures for the first quarter are very much in line with expectations. Increased levels of enforcement action by NAMA and banks, combined with continued weak consumer sentiment in the retail sector suggests that there will be no reduction on the 2010 level of insolvencies.”

The worst affected sector remains construction, however there is a continued trend of increasing levels of business failure in both the retail and services sectors. April saw a total of 31 firms in the service industry face insolvency while retail accounted for a further 22 firms. Both of these sectors show a trend of increasing failure over 2010 rates.

A further trend is the increase in wholesale sector appointments with 32 to date in 2011 comparative to 37 for the whole of 2010.

“The continued growth in retail and service insolvency appointments is worrying. These sectors are highly dependent on consumer sentiment and increasing rates of business failure reflect a lack of confidence in the Irish economy. Continued downward price pressure and weak levels of demand suggest this trend is likely to continue,” Fennell said

April has brought some high-profile NAMA appointments over large developers, a trend likely to continue.

Kavanaghfennell said that developments in this area to note are the high volume of receiverships over personal borrowings rather than companies which are not formally registered or reported as there is no requirement under Irish law. It is to be noted that there has been a rapid increase in appointments in this area in the past two years.

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