Corporate insolvencies saw 50% year-on-year increase in H1 has been saved
Corporate insolvencies saw 50% year-on-year increase in H1
Corporate Insolvency Statistics H1 2022
A total of 253 corporate insolvencies were recorded in Ireland in the first half of 2022, according to the latest insolvency statistics published by Deloitte. This represents an increase of 50% from the same period in 2021, when a total of 169 insolvencies were recorded. On a quarterly basis, 133 corporate insolvencies were recorded during Q2 2022: an 11% increase when compared to Q1 2022, during which 120 insolvencies were recorded. The 253 insolvencies recorded in H1 2022 represent an 18% decrease on the 310 recorded in H1 2019, before the impact of the Covid-19 pandemic and related government supports for businesses.
David Van Dessel, Partner, Financial Advisory at Deloitte said: “Despite the increase in corporate insolvencies seen year-on-year, the level of insolvencies in Ireland remains relatively low when compared with pre-pandemic levels. The ability to warehouse revenue debt during the pandemic has clearly provided vital breathing space for many SMEs impacted by pandemic restrictions - however, Revenue has signalled that it will begin to seek repayment of these debts in 2023.
“In addition, it appears that the full effects of high inflation, soaring energy costs, global supply chain issues and labour shortages have yet to have any significant impact on corporate insolvencies in Ireland. We expect these factors to influence the insolvency numbers over the coming months.
“It is notable that so many companies in the services sector experienced insolvency during H1, despite the lack of component inputs into these businesses.
“A total of 167 companies entering insolvency were classified in this sector. A more in-depth review of these figures shows some 70% of those were classified as being in the Financial Services and Real Estate sector.”
The services sector recorded the highest number of corporate insolvencies during H1 2022 at 167, representing 66% of all insolvencies recorded during the period. This is an increase of 129% compared to H1 2021, when the services sector recorded a total of 73 insolvencies.
50% of insolvencies recorded in the services sector during H1 2022 related to financial services organisations (84 insolvencies). The real estate sector recorded 33 insolvencies during H1, representing 20% of service sector insolvencies. The entertainment sector recorded 11 insolvencies during the quarter (7%), followed by arts and media with nine (5%) and technical and professional services with six (4%), while fitness and beauty, health and social work, education and other services accounted for the remaining 24 insolvencies (14%).
Outside the services sector, the construction sector recorded 23 insolvencies during H1, representing 9% of all insolvencies recorded during the period. This is a decrease of 26% when compared to H1 2021, when a total of 31 insolvencies were recorded in construction.
19 insolvencies were recorded in the retail sector during H1 2022, which is in line with H1 2021, when a total of 20 insolvencies were recorded.
The hospitality sector recorded 14 insolvencies during H1, slightly lower than the 17 recorded in H1 2021. Of the 14 hospitality sector insolvencies recorded so far in 2022, seven relate to restaurants, while four relate to bars, two relate to hotels and one relates to a catering company.
10 insolvencies were recorded in the manufacturing sector during H1, representing 4% of total insolvencies; the transport sector recorded seven insolvencies (3% of total), while the wholesale sector recorded five (2% of total), all representing a decrease on the level of insolvencies seen in these sectors during H1 2021.
52 insolvencies recorded during the first half of 2022 (21% of total) relate to companies less than five years old. 68 (27%) relate to companies in the 5-10 years bracket; 61 (24%) relate to companies in the 10-20 years bracket; 40 (16%) relate to companies in the 20-30 years bracket; 27 (11%) relate to companies in the 30-40 years bracket; and 5 (2%) relate to companies over 40 years old.
The age profile analysis indicates that almost half (48%) of insolvent companies in H1 2022 were in the 0-10-year-old bracket.
Companies in Leinster recorded 183 insolvencies during H1 2022, which represents 72% of total insolvencies. 45 were recorded in Munster (18%), with 18 in Connaught (7%) and 7 in Ulster (3%).
Compared to H1 2021, the biggest increase in H1 2022 was seen in Leinster with an 83% increase. Munster and Connaught also saw an increase in the number of insolvencies while Ulster (ROI) saw a decrease from 10 to 7.
A total of 170 Creditors’ Voluntary Liquidations (CVLs) were recorded during H1, representing 67% of total insolvencies in the period, followed by 58 Corporate Receiverships (23% of total); 13 High Court wind-up petitions (5% of total); nine Examinerships (4% of total); and four Small Company Administrative Rescue Process (SCARP) appointments (2% of total).
With the exception of High Court wind-up petitions – which saw a decline in H1 when compared to the same period in 2021 – and SCARP appointments – which were not yet available in H1 2021 – all other types of insolvency processes saw a year-on-year increase in uptake, which is in line with the overall increase in corporate insolvency activity.
Van Dessel continued: "The low uptake of the newly-introduced SCARP
process – with only four appointments made to date – is likely a result of
companies continuing to avail of the debt warehousing scheme. We expect more
companies to avail of SCARP once these debts begin to be repaid.”
Issued by Murray on behalf of Deloitte Ireland
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Corporate Insolvency Statistics Q1 2022
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