Steep fall in numbers of insolvent businesses
Insolvencies in some parts of the country have nosedived by more than 50% in the past month despite a quarterly nationwide increase, two reports indicate.
Data compiled by Vision-net.ie shows that Cork saw a 55% drop-off in insolvencies this month compared to the same period last year, while counties Dublin and Meath accounted for the highest proportions of insolvencies.
The decrease in Cork is more than twice that of the country as a whole, which had a reduction of 26%.
Despite the large decrease, Cork remained near the top of the insolvency ladder as the third most insolvent county.
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Overall, 83 companies were declared insolvent in June compared to 112 in the same month last year.
Counties Carlow, Clare, Kerry, Kilkenny, Monaghan, Offaly, Roscommon, and Waterford experienced no insolvent businesses this month.
Vision-net.ie managing director Christine Cullen said June’s significant drop in insolvencies “indicated an economic environment more favourable to long-term business growth”.
“This month’s 26% year-on-year drop in insolvencies, coupled to a daily average of 65 new businesses every day of the month, is further evidence that it has become easier for existing and new businesses to successfully trade and develop within the Irish economy,” said Ms Cullen.
“This month the real estate sector experienced the highest growth in insolvencies. It represents a reversal of the positive growth trends recorded by the sector over recent months.
“While it’s still too early to tell, both the new Central bank mortgage lending rules and shortage of housing supply may be impacting on the real estate sector.”
The real estate sector accounted for a fifth of all insolvencies in June following an increase of 45.5%.
Sixteen companies operating in the sector were declared insolvent in June compared to 11 in the same month of 2014, a 45.5% increase.
Wholesale and retail and professional services were the second and third most insolvent sectors.
Between them, these three sectors accounted for just over half of the insolvencies recorded this June.
However, the construction and hospitality sectors had a year-on-year drop in insolvencies by 27% and 44% respectivelty.
A report by Deloitte yesterday painted a less favourable picture of the insolvency landscape, however, with a 10% increase in the second quarter of the year.
The report shows 275 corporate insolvencies over the past three months, of which close to 70% were voluntary liquidations.
Receiverships accounted for 75 (27%) of the total corporate insolvencies in the second quarter of this year, up by 20 from the first quarter.
Additionally, there were 13 court liquidator appointments — almost half of which were initiated by the Revenue Commissioners.
Just 1% of the insolvencies recorded were accounted for by examinerships — a tiny proportion in light of new legislation that was introduced in early 2014 and which appears to have had little effect.
The retail sector is also identified as the industry most dogged by insolvencies following a 52% increase on the previous quarter which indicates that difficult trading conditions persist despite signs of a pick-up in the domestic economy.
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