Up to 1,600 Irish company
insolvencies are expected in 2011, bringing the total of company collapses since
January 2008 to 5,300 companies.
New statistics released by
InsolvencyJournal.ie reveal that the number of insolvencies recorded in the
first six months of 2011 have totalled 819, an increase of over 3% when compared
with 792 for the same period in 2010. The 2011 figures however, show a 32%
increase when compared with the first six months of 2009 which totalled 622.
Commenting on the figures, David Van
Dessel a partner with Kavanaghfennell who compile the data said: “Based on
the first 6 months of 2011, we are predicting the current rate of corporate
insolvencies to continue for the remainder of 2011, which would point towards a
total in the region of 1,600 corporate insolvencies for the calendar year 2011.
That estimate is therefore in
line with the actual total figure for 2010, which came in at over 1,500. If the
economic climate was to worsen, for example through further increases in
interest rates, the forecasted figure for 2011 might be viewed as being
conservative. Looking back on our position at this time in 2010, our figures
were indicating a 27% increase in corporate insolvencies; this time around the
increase is just over 3%, which although it is not a decrease, would indicate a
stabilisation in the incidence of corporate insolvencies.”
When comparing industry totals, the
construction industry was the worst affected in this period, accounting for 25%
of the overall insolvencies. When comparing the totals to the 2010 level, the
construction sector has seen a decrease of 14% from 236 in 2010 to 203 in 2011.
The retail industry, which recorded
120 insolvencies from January to June this year accounted for 15% of the total
and saw a significant rise of 25% from 96 in 2010. Hospitality failures
increased by approximately 4% from 102 in 2010 to 106 in 2011, but the wholesale
industry showed the biggest increase, rising from 17 in the first six months of
2010 to 41 in 2011, an increase of 141%.
“On a national basis, the
incidence of corporate insolvency may be stabilising, but the aforementioned
statistics when viewed at the level of various industries, reveal a story of
contagion. The incidence of insolvency in the construction sector may have eased
by 14%, but the retail sector is now in the eye of the storm with a 25% increase
in insolvencies. The hospitality sector also remains vulnerable in 2011 with 106
insolvencies. The figures for the wholesale sector reveal a dramatic change,
possibly reflecting the impact of bad debts from retail insolvencies, as
suppliers are hit with bad debts through the insolvencies of their retail
customers," commented Van Dessel.
Dublin continues to account for the
majority of corporate insolvencies with a total of 304 (37%) of the total
recorded for the first six months of 2011; this is followed by Cork with 73 (9%)
of the national total. The county least effected was Longford recording only 2
insolvencies so far this year.
Receiverships for the first six
months of 2011 totalled 124, a 5% increase on receiverships in the same period
for 2010 and the same total for the full year of 2009. This total does not
include personal asset receiverships as there is no official record of these,
but the total would probably be a multiple of the aforementioned figure. There
were 22 NAMA appointed receivers from January to June this year, which included
companies such as Whelan Group, McEnaney Construction, Glenkerrin Homes and
“The incidence of corporate
receivership would appear to be in line with overall trends, in that they are up
5% on the same period in 2010, while the overall level of corporate insolvency
is up over 3%. Although 2010 did see a significant increase in activity in the
area of corporate receivership, that level would appear to have remained
relatively constant during late 2010 and on through to 2011. However this view
does not take account of personal asset receiverships, which has been a very
active area in recent times,” added Van Dessel.
The first half of 2011 saw eight
applications for Court protection granted by the High Court, however 5 of these
have now entered liquidation or receivership. One company granted Court
Protection was Four Star Pizza which has now exited the examinership process
successfully. The outcome of the McInerney examinership is still outstanding
and a decision from the Supreme Court is expected within weeks.
Of 8 examiner applications thus far in 2011, only 3 of those companies have
survived to date. The number is in line with 2010, when 16 applications were
made that calendar year, but that was also a very low level, as there had been
37 such applications in 2009.
During the first half of 2011, the High Court issued a landmark judgment in
relation to the crystallisation of floating charges in the liquidation of
Belgard Motors. The official liquidator, Tom Kavanagh of Kavanaghfennell, sought
directions from the High Court in relation to whether crystallised floating
charges had been converted to fixed charge over assets of circa €2m. The High
Court decided that the crystallised floating charges cannot rank ahead of the
preferential creditors. This decision was a disappointing judgment for banks
who hold floating charges and may have sought to crystallise them prior to an