Three firms went bust each day in May, records reveal
Three firms went bust every day last month, new figures revealed yesterday.
Company records showed the rate of insolvencies has fallen for the third month in a row but the number of businesses shutting their doors for good was more than 25pc higher this year than the same period in 2009.
While businesses are going bust at a slower rate it's too early to tell whether the improvement is a temporary blip or the result of more solid economic activity, according to data released yesterday by insolvencyjournal.ie.
The journal revealed that the rate of company failures in Ireland slowed for the third consecutive month in May, with 112 insolvencies having been recorded. That's down 26pc on the year-high figure of 151 that was notched up in February.
The construction sector once again proved the most vulnerable to the slowdown, with 194 companies having gone to the wall since the beginning of the year. That compares to a total of 180 that collapsed in the same period last year.
The services industry has proved the most resilient, with just four insolvencies recorded in May compared to 27 in April. The journal noted that hopes for a recovery could be premature, as the run-rate of insolvencies is still far higher so far this year than in the first five months last year. Since January 2010, 652 companies have failed, compared to 512 in the first five months of 2009. A similar dip in insolvency figures experienced last month was also recorded in May last year, but the pace accelerated significantly again in the following six months.
Ken Farrell, a partner with Kavanagh Fennell, said the new data appears to signal that insolvencies have bottomed out but maintained it's too early to determine if seasonal factors rather than general economic improvement are influencing the rate. In the retail sector, the total number of insolvencies so far this year is 78 compared to 64 for the first five months of 2010.
Torlach Denihan, director of IBEC-affiliated Retail Ireland, said rents and low margins continue to impact businesses.
"The general overall view in the sector is that things have stopped falling and have maybe even come to a halt but we're at a much lower base than we were before," he said, adding that the "big issue" still remains rent.
Meanwhile, receivers were appointed to 12 companies in April and 16 in May compared to 21 in each of the previous three months.
A number of companies exited court protection last month, but none entered examinership in May.