More than 1,400 businesses crashed on the long road to recovery in 2009
Statistics and the cold language of company law conceal the human cost of the recession, writes Jerome Reilly
Published 17/01/2010 | 05:00
Reds on the Green, where top stylists were called "directors" and commanded €120 for a cut and up to €200 for highlights, was a "go to" salon for Dublin's fashionistas. But one month after Finance Minister Brian Lenihan delivered his so-called "turn the corner" budget, Ms Justice Mary Laffoy made an order to wind up the stylist's parent company.
The High Court judge was told that the firm -- Reds on the Green Limited, with a registered address at Altan House, Herbert Street, Dublin -- was insolvent and unable to pay €200,000 that it owed to the taxman. The city centre salon is just one of 228 companies that have been liquidated by the courts, gone into receivership or examinership, or have called meetings of creditors in the last six weeks.
In many cases, calling a meeting of creditors is the first step on the road to corporate oblivion. More than 1,400 Irish companies were declared insolvent last year -- an increase of 82 per cent on 2008. Mr Lenihan's budget, greeted by some commentators as the cure-all for Ireland's economic ills, came too late for 156 companies declared insolvent during December. That means an average of five companies a day went to the wall last month. But bald statistics and the impenetrable jargon of insolvency and company law hide the human cost of the devastation of Irish business during the last 12 months.
The dreams of gutsy individuals with the entrepreneurial spirit to go out on their own have been shattered -- their workers left to the misery of the dole queue with scant prospects.
For many, especially those under 25, emigration may be the only alternative to long-term joblessness. The construction sector, with 453 closures last year, has borne the brunt of the economic catastrophe. Mr Lenihan's budget -- the "last of the very difficult budgets" -- did nothing to lift the property sector from the floor; and in the month he delivered it, another 49 building companies were declared insolvent. The insolvencyjournal.ie website, facilitated by insolvency experts Kavanagh Fennell, has charted the dismantling of many companies during the downturn and their figures suggest that 278 companies in the services sector were declared insolvent last year. But restaurants, bars and cafes and all other elements of the hospitality industry, including catering, have also sustained heavy casualties.
Retailers also suffered badly last year -- but the sector which spent 2009 in a desperate trench war against reduced consumer spending and cross-border shopping, will face their Somme in the next few months.
Christmas trading may have been strong in some areas of retail, but the recent cold snap was another kick in the teeth and heaped further pressure on struggling businesses. Retail Ireland are reporting a 38 per cent drop in retail sales since January 1.
The Small Firms Association has also warned that the cold spell could result in huge business losses.
There are few prospects on the horizon, though there is anecdotal evidence that small shops have cleaned up during the cold weather with householders turning back to their local grocer.
Belgard Motors went to the wall with a liquidator appointed by the High Court on the Monday before Mr Lenihan announced the Government's car scrappage scheme, which gives owners of cars older than 10 years a State windfall of €1,500 if they trade in for an environmentally friendly new car. That long-awaited stimulus came too late for EP Mooney -- the Dublin car dealership which had survived every downturn since 1969. Belgard had a liquidator appointed by the High Court five days after the Budget, and next Saturday there will be a queue of bargain hunters picking over the bones of the business at a €3m, no reserve sale of its stock of 250 new and second-hand cars.
The court was told EP Mooney operated five garages in Dublin and employed 95 people. At the time the liquidator was appointed, it had debts of some €22m.
The principal of EP Mooney, Padraic Mooney, has already begun trading again in his old showrooms under the name "Mooney's".
The new venture is smaller and employs 20 and is a Hyundai sales, service, and parts franchise and both a Nissan and Honda service and parts franchise.
In an email he explained that he fought hard to keep the EP Mooney business alive.
"For me failure was never part of the plan, especially after 36 years in business. The motor business is in my blood, so believe me when I tell you that putting the company into liquidation was the hardest business decision of my life but I had to do it as I was unable to convince our bankers that the business had a future," he said.
As well as Belgard and EP Mooney, the High Court also appointed liquidators to eight other firms, according to insolvencyjournal.ie. They were Derber Developments Limited, Grealy Homes, Darjohn Developments Limited, Sweeney & Roulston Construction Limited, Tierney Kitchen Manufacturers, Budget Travel Limited, HDS Consultancy Services Limited and Pearse Taverns Limited.
Also in December, another seven firms of varying size had a receiver appointed. Four were in the construction sector and one each in services, manufacturing and hospitality. The companies were: Investment Options and Solutions Limited, Holeshot Limited, Marina (Mount Street Pub) Limited, Aviva Security Distribution Limited, Fordmount ( Savoy) Limited, Keenbury Properties, and Dez Developments. Up to the beginning of last week, two companies have gone into receivership, Marbrook Developments Limited and Joseph O'Dea Limited; while Reds on the Green Limited had a liquidator appointed by the courts. The list of companies that have called meetings of creditors is especially bleak.
In December, 141 separate companies announced they were to hold creditors meetings and that grim phenomenon has continued this month with another 67 firms indicating they have difficulties by calling a meeting of those to whom they owe money.
It's not over yet.