Over 1,400 firms go to wall with bleak 2010 predicted
MORE than 1,400 companies went to the wall last year and a leading insolvency practitioner expects a "similar" number to collapse in 2010.
The stark 2009 tally is revealed in full-year data from Kavanagh Fennell's insolvencyjournal.ie, and marks an 82pc increase on 2008's figures.
Ken Fennell, partner at insolvency experts Kavanagh Fennell, said the outlook for 2010 was "pessimistic", with a "rate of insolvencies similar to 2009".
The bleak-sounding prediction comes against a growing consensus that the worst is over, with our economy now poised for recovery.
"In a general sense, we'd say the worst is over as well," said Mr Fennell. "That said, the amount of inquiries we had in the last few months from people considering liquidation in 2010 is equal, if not greater, than what we saw a year earlier."
Mr Fennell said the high rate of failures expected in 2010 was linked to "natural failures" from the high level of start-ups in recent years, coupled with the "knock-on effects" of a brutal 2009.
"For companies that went into liquidation in the fourth quarter of 2009, it will be the first or second quarter of this year before you see the knock-on effect that has on other companies (they owed money to)," he stressed.
He added that 2010 would also see "seepage" into sectors beyond construction, which accounted for more than a third of all business collapses last year.
"We've seen a bottoming out in construction, you wouldn't expect to see the same level of collapses there again, especially with Nama coming," Mr Fennell said. "The retail sector is going to struggle in 2010 as a result of the non-spend, and you'd be looking at a lot of pressure on hotel and leisure as well."
On a more optimistic note, Mr Fennell said that while the overall number of company failures in 2010 was likely to be on par with 2009's, he did not expect to see the same number of big business failures.
In 2009, scores of household names like Liam Carroll's Zoe Group, O'Brien's Sandwich Bars and the Belgard Motor Group submitted to insolvency procedures; Mr Fennell said he expected the action to be concentrated on "smaller companies" next year.
The details of 2009's figures show a total of 1,406 companies were declared insolvent last year, up from 773 in 2008 and 363 in 2007. Construction accounted for 453 of last year's insolvencies, followed by services (278), retail (201), hospitality (154) and manufacturing (123).
Creditors' voluntary liquidations, where companies are wound up at creditors' meetings, was the most common route taken by insolvent companies, accounting for 1,137 of last year's cases.
The next most common occurrence was receivership, where a secured creditor steps in, with 124 cases, followed by court-directed liquidations at 106. The least popular method was examinership, a court-led rescue process which was attempted by just 37 companies last year, down on the 62 in 2008. Of those 37, just a fraction succeeded.