Press releases

The service sector recorded the most corporate insolvencies in Q1 2017

The latest insolvency statistics published by Deloitte show that the total number of corporate insolvencies recorded in Q1 2017 was 219. This represents a 13% decrease on the same period in 2016 (251).

A closer look at the details shows that of these 219 corporate insolvencies, Creditors’ Voluntary Liquidations (CVL) accounted for the majority with 114 recorded in the period (52%) closely followed by receiverships at 86 insolvencies (39%).  Total CVLs have dropped by 34% in comparison with the same period last year (173 cases) and receiverships have increased by 34% (up from 64).

There were 7 court liquidator appointments in the period, down from 12 in the comparable quarter.

While examinerships continue to remain at low levels we do see a significant increase in appointments compared to the same period last year. In Q1 2017 12 examinership appointments were made, in comparison to 2 in the prior period.

David Van Dessel, Partner in Deloitte Restructuring Services, commented that “early action by business owners remains imperative for successful restructuring.  I would urge company directors to seek assistance in addressing their financial difficulties before it’s too late to save the company.”  

For smaller SMEs there are still options to explore this type of restructuring through use of the “super-lite examinership”, s.450 schemes of arrangement.  This is a cheaper option with less court involvement that affords struggling companies a real chance at survival.

Additionally, the European Commission have recently proposed a new directive aimed at streamlining the restructuring process across Europe. The proposal aims to increase the opportunities for businesses in difficulty to restructure at an early stage to prevent business failure. The proposal also aims to redevelop the culture around seeking restructuring assistance, an initiative that hopefully will encourage company directors in Ireland to seek assistance before it is too late. 

Geographically, the highest number of corporate insolvencies in the period was recorded in Leinster with 64% (141) of the total appointments.  This is consistent with the comparable quarter (68% of appointments).  Munster recorded 24% of all appointments, up from 21% the previous period, while Connaught had 11% of the cases.  Finally, Ulster had just 1% of insolvencies, down from 4% in 2015.

An analysis of industry sectors shows that the service sector recorded the most corporate insolvencies in Q1 2017, with 76 (35% of the total), up one from Q1 2016 (74 insolvencies).  In second position is the construction industry with 36 insolvencies (16%), down from 42 in Q1 2016, a decrease of 14%.  This is in line with our expectations, seeing as this sector is improving recently. The retail industry was third with 28 (13%) corporate insolvencies, largely unchanged and the hospitality industry was fourth with 27 (12%).

Looking more closely at the service sector, the majority of cases were in the financial services, consulting and property service company areas.

These results interestingly show a marked decrease in the total number of corporate insolvencies in the first quarter of 2017. Looking back at the same quarter in prior years, we haven’t seen as low a total since 2009 when the effects of the economic downturn first began to be clearly seen in the insolvency statistics. While we still aren’t seeing the low levels of insolvencies recorded during the so-called Celtic Tiger years, it may be that the particularly low numbers seen in 2007 and 2008 were outliers themselves and we are currently moving towards a more realistic baseline to compare future levels to.

In 2017, we would anticipate similar overall levels of corporate insolvencies as in 2015 and 2016 seeing as the economy in general is improving. Companies in the services sector may continue to be most likely to enter an insolvency process in 2017 and we would also expect a slight decline in the number of construction company failures, given the improvements in this sector.

Get in Touch

Ruairí Keogh
Senior Corporate Communications Manager, Deloitte

+353 1 417 3691
rukeogh@deloitte.ie

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