Rate of business failures down 26pc to post-crash low - Deloitte
Insolvency rates have fallen to a post-crash low - but many troubled firms still take too long to consider "viable turnaround strategies", according to a business rescue expert.
Deloitte said the 26pc decline in insolvencies to 568 last year from 2018's total of 767 reflected continued strength in the domestic economy and consumer spending, but more firms could have been saved via more rapid intervention.
"While Ireland has a robust legal system with a variety of restructuring options for struggling companies, the very high prevalence of liquidation and receivership continues to show that such tools are not being utilised," said David Van Dessel, a financial advisory partner at Deloitte.
"It is vital to ensure that directors of Irish companies are equipped to take the necessary steps to avoid insolvency, or mitigate its impact on creditors and other stakeholders."
Please log in or register with Independent.ie for free access to this article.
By sector, 37pc of firms declared insolvent in 2019 provided services, including 12pc in financial services.
Construction accounted for 17pc, retail 15pc, hospitality 14pc, manufacturing 7pc, real estate and property 7pc, and wholesale firms 3pc.
Most failed firms were more than five years old, not startups, Mr Van Dessel said, suggesting they often ran into difficulty when directors attempted "to fund expansion from current working capital as they do not have the ability or the appetite to raise the necessary finance from external sources".
"It is important that directors of companies facing such difficulties seek appropriate advice in a timely fashion to be in a position to implement viable turnaround strategies," he said, adding the State should provide more Money Advice and Budgeting Service (MABS) style supports.
"While Ireland currently provides advisory and advocacy services for individuals in financial difficulty, such as MABS, no such facility exists for corporates facing insolvency," he said.
Deloitte, which compiles quarterly data on business failures, noted that insolvencies peaked at 1,684 in 2012 at the depth of Ireland's fiscal crisis.