Corporate insolvencies in 2017 total 874, down 15% when compared with 2016, according to Deloitte

Of the 874 corporate insolvencies in 2017 creditors’ voluntary liquidations accounted for the majority, with 535 recorded in the period (61%), compared to 626 in 2016.  This was followed by receiverships, which accounted for 247 (28%), compared with 346 last year. This mix of insolvencies is typical of prior periods. There were also 63 court liquidator appointments, up 18 from 2016 and in the majority of these cases the Revenue Commissioners took the petition to wind up.  Finally, examinerships continued to remain at low levels during 2017 with only 29 examinership appointments. While this represents just 3% of the 874 corporate insolvencies it is still almost double the number of examiner appointments in 2016 (15).

Commenting on the 2017 figures, David Van Dessel, Partner, Restructuring Services, Deloitte stated: “The drop in the level of corporate insolvencies is in line with the average rate of decrease observed over the last 5 years.  2017 saw a drop in receiverships by almost a third, but of particular interest is the doubling, albeit from a low base, of examinerships.  It seems that the message that this restructuring route is offering companies a real chance at survival is getting through and I hope to see this figure increase again during 2018.  We know from the figures that half of companies who choose this route survive and that has to be a motivator for any company director.

“As the economy improves there is greater risk capital available and investors of this capital are looking for companies which have a greater propensity for recovery to invest in, and I think that is why we are seeing an increase in the take up of examinerships and such a solid success rate.  We know from our nearest neighbours, the UK, that this is popular with 1 in 7 of all corporate insolvencies going through this route, compared to 1 in 33 here in Ireland, so there is plenty of room for growth,” he said.

Examinerships

In 2017, of the 29 appointments in total, 21 have exited the process at the end of the year with 11 of the companies involved successfully returning to trading (52%) and 10 going into liquidation. Eight remain in examinership.

“This success rate is lower in comparison with 2016 when more than 70% of companies returned successfully to trading but still demonstrates that many struggling companies can return to an even keel if they attempt an examinership,” Mr Van Dessel observed.

Geographic spread

Geographically, the highest number of corporate insolvencies in 2017 was recorded in Leinster with 67% of total appointments. This is consistent with 2016 where Leinster had 67% of all corporate insolvency appointments.  In 2017, Munster had 19% of appointments, Connaught 12% and Ulster just 2%, again showing consistency with last year.

Sectoral spread

From a sectoral perspective, the service industry recorded the most insolvencies in 2017 with 391 appointments (45%). This a 19% increase on 2016 when 329 appointments were recorded.

The construction industry recorded the second highest level of appointments with 110 (13%). This is a decrease of 33% from 2016.

The retail sector came in third, where there were 103 insolvencies, 12% of the total, up from 96 in the prior period. The hospitality sector is fourth with 91 insolvencies, 10% of the total and down 25% from last year. Finally, the manufacturing sector recorded 44 insolvencies in the period.

Of the 391 service industry appointments, 22% of cases related to real estate agents and brokers, while another 20% were companies who dealt with provision of business support services and general consultancy. 13% were holding companies.

 “Looking to 2018 we predict that the overall level of corporate insolvencies will continue to decline at rates observed in previous years, being approximately 10% per year,” concluded Mr Van Dessel.

Ends

Issued by Murray on behalf of Deloitte Ireland

For Further Information Please Contact

Aoibheann O’Sullivan

Murray

01 498 0300/ 087 6291453

aosullivan@murrayconsultants.ie

Claire Quinn

Deloitte

01 417 2356/ 087 9777783

cquinn@deloitte.ie

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