Business Irish

Thursday 18 September 2014

Crash continues to bite as firms going under in 2012 rise by 3pc

But outlook brighter for year ahead as number of insolvencies predicted to fall

Published 01/01/2013 | 09:00

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The retail sector accounted for 13pc of all insolvencies during 2012, with several high profile names including Clerys department stores (pictured) going into receivership. It was sold to an American private equity group Gordon Brothers just hours later.

NEARLY 1,700 businesses went under in 2012, as market conditions continued to worsen.

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New statistics from the InsolvencyJournal.ie website show that 1,684 companies failed last year, up 3pc on 2011, and 10pc higher than 2010.

Five years into the crash, the construction sector is still the biggest problem. About a quarter of all businesses that closed were involved in that industry.

Ken Fennell of the accounting firm Kavanaghfennell, which runs the Insolvency Journal, said that 2012 had seen a shift in the type of insolvency companies were facing.

"There was an increase in examinerships and receiverships and a decrease in both creditor voluntary liquidations and court liquidations.

Restructuring

"This would indicate a move towards restructuring of companies instead of company closures," he said.

The retail sector accounted for 13pc of all insolvencies during 2012, with several high profile names, including Clerys department stores, going into receivership. At 220, however, the number of retail failures was down 3.5pc on the previous year.

Trade group Retail Excellence Ireland has already indicated that retail sales were up in 2012.

There were 171 failures tied to the hospitality sector, down 16pc year on year, but the manufacturing sector endured a grim year, with the number of insolvencies surging 26pc to 130. That meant the sector accounted for 8pc of all failures during the year.

The motor and transport industries both accounted for 2pc of all insolvencies this year. Failures in the motoring sector tumbled by 47pc while transport insolvencies fell 34pc when compared to 2011 totals.

There were high-profile insolvency cases across both sectors, most notable the receivership of Bill Cullen Motor Group and the winding-up of transport firm Target Express.

There were 399 corporate receiverships recorded in 2012, an increase of 40pc on the 284 in 2011 and 77pc more than the number recorded in 2010. Some noteworthy receivership appointments during the year were A-wear, Lyrath Estate in Kilkenny and Greenstar, Kavanaghfennell said.

Examinership Examinership activity during 2012 also increased significantly from 16 cases in both 2010 and 2011 to 27 in 2012, almost a 70pc hike, with the cases of Atlantic Homecare and Cappoquin Chickens in particular, grabbing the headlines.

"This increase in examinership activity looks likely to continue with the recent Government announcement to allow small private companies to apply directly to the Circuit Court to have an examiner appointed.

"This amendment will make it cheaper and easier for businesses to restructure their debts and means that more businesses will survive their current difficulties and we would anticipate a significant increase in those availing of the examinership process during 2013," Mr Fennell said.

Liquidations fell 6pc to 1,258.

Looking ahead to 2013, Mr Fennell said he expected insolvencies to fall slightly this year for the first time in five years.

"We would also anticipate significant numbers of examinerships during 2013," he added.

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