Service industry sees rise in corporate insolvencies of 131% in Q1 2016
251 corporate insolvencies in Q1
Statistics for Q1 2016 show that there were 251 corporate insolvencies in the current period which represents an increase of just one when compared with the same quarter last year.
This may be an indication that the number of corporate insolvencies in Ireland are beginning to level out. In recent years, the highest number of insolvencies recorded in the first quarter of the year was in 2012 when there were 433 appointments. The level of corporate insolvency appointments overall for 2016 is expected to be slightly lower than the total recorded in 2015 (1,049) however it is quite early in the year to make any accurate forecast.
- The service industry recorded the most corporate insolvencies in this period. This represents a 131% increase on the same quarter in 2015, and accounts for 29% of all insolvencies in Q1 2016.
- The construction industry recorded the second highest level of appointments with 42 (17%). The retail, hospitality and manufacturing industries had 13%, 8% and 7% of the appointments respectively, with the balance coming from other sectors.
- The highest number of corporate insolvencies in the period was recorded in Leinster with 68% of total appointments. Munster had 21% of appointments, Connaught 7%, and Ulster just 4%.
- Of the 251 corporate insolvencies, creditors’ voluntary liquidations accounted for the vast majority, with 173 recorded in the period (69%). Receiverships accounted for 64 (25%) of the total corporate insolvencies in Q1 2016. Additionally, there were 12 court liquidator appointments in the current period and just two examinership appointments.
- Examinerships continue to remain at disappointingly low levels which suggest that the introduction of new legislation in early 2014 has not had the intended effect of encouraging more struggling SMEs to avail of this more cost-effective and accessible option. Once again, company directors and owners are urged to take early action to address their financial difficulties before it is too late to save their businesses.
David Van Dessel, Partner in Deloitte Restructuring Services, commented: “Overall, this quarter’s results indicate that we may be entering a period where the total number of corporate insolvencies begins to level out somewhat. While we aren’t yet observing the low levels of insolvencies recorded during the so-called Celtic Tiger years, it may be that those particularly low numbers seen in 2007 and 2008 were outliers themselves and the levels recorded in 2015 and so far in 2016 are a more realistic baseline to compare future levels to.”