Monday 23 January 2017

Receiverships back on the rise as funds chase returns

Sean Duffy

Published 29/09/2016 | 02:30

Receiverships in Ireland are back on the rise after levelling off in the early period of the recovery, a sign private equity funds are enforcing security on distressed loans purchased from Irish banks.

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The latest data from Deloitte paints a mixed picture, with overall insolvencies more or less steady, but spikes in some sectors, including services.

After peaking in the immediate wake of the financial crisis corporate insolvencies had trended lower in recent years and into the first half of 2016.

However, the latest statistics show receiverships - where creditors seize control of assets following a borrower default - on the increase.

The number of receiverships in the first three quarter of this year hit 274, and if that trend continues is well on course to outstrip the total for both last year and 2014.

Industry experts say it reflects activity by private equity funds that have purchased large tranches of non-performing loans from Irish lenders, and are now working through them including in some cases pursuing debtors more aggressively than the banks.

The data shows corporate insolvencies in the services sector more than doubled in the third quarter of this year. Creditors' voluntary liquidations (59pc) accounted for the majority of the overall figure.

The overall increase in corporate insolvencies in the period was just 3pc, however.

Commenting on the figures, David Van Dessel, partner in Deloitte Restructuring Services, said insolvencies had levelled off following a period of heightened activity during and following the recession, but that the rising tide was "not lifting all boats".

He added: "The results show that the total number of corporate insolvencies is beginning to level out somewhat and we are likely seeing a more realistic picture of corporate insolvencies in Ireland, following a period of heightened activity during and following the recession.

"However, when comparing Q3 alone with the same period in 2015, insolvencies have increased by almost a fifth.

"Furthermore, we have observed a very significant rise in insolvencies in the services sector.

"Therefore, the level of insolvencies has stopped falling," he added.

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