Corporate insolvencies totalled 1,049 in 2015, according to figures released today by Deloitte – a 10% decrease on 2014.
Of these 1,049 corporate insolvencies, creditors’ voluntary liquidations accounted for the vast majority, with 729 recorded in the year (69%).
This is consistent with 2014 where creditors’ voluntary liquidations accounted for 67% of total corporate insolvencies. Receiverships accounted for 251 (24%) of the total corporate insolvencies in 2015, down by 50 from 299 last year. There were 50 court liquidator appointments in 2015, down from 68 in 2014.
Examinerships continue to remain at low levels. In 2015, only 19 examiners were appointed, representing just 2% of all insolvencies in the year. This level of examinership take-up is consistent with prior years and shows that the introduction of new legislation in early 2014 has still not had the anticipated effect of encouraging struggling SMEs to avail of this more cost-effective and accessible option.
David Van Dessel, partner, Deloitte Restructuring Services, commented: “It is encouraging to see the number of insolvencies continues to decline and is an indication that the improving economy continues to be felt on the ground by companies.
“However, as 2015 ends, it is disappointing that changes, both from the Companies Act 2014 and the new ‘examinership-lite’ legislation of 2014, have not yet made an impact in 2015. These are extremely valuable options for restructuring debt. Take up of examinership continues to remain at very low levels when compared to our international peers and shows that a real effort needs to be made to educate SMEs on this option.”
The service sector experienced the most corporate insolvencies in 2015, with 200 (19%), closely followed by the retail industry at 154 (15%). The construction industry recorded 139 corporate insolvencies (13%) and the hospitality industry recorded 109 (10%). In 2014 it was the construction industry, which recorded the most corporate insolvencies at 20% of the 1,164 total, followed by the services sector with 16%.
Commenting on the outlook for 2016, van Dessel stated: “We anticipate that the total number of corporate insolvencies will continue to decrease. Furthermore it is expected that there will finally be an increase in the number of companies opting to restructure by way of examinership. By corollary, the anticipated increase in restructuring should lead to a corresponding decrease in the number of creditors’ voluntary liquidations.
“The retail sector is likely to continue to experience difficulties as a result of sector-specific factors. In the hospitality sector, while the hotel trade is improving, especially in cities, the traditional pub sector continues to deal with changing market demand and the challenge to adapt and to come up with new strategies for success will remain.
“Looking at the regional spread of corporate insolvencies, we predict the effects of a two-tier economy will prevail during 2016, whereby the rest of the country will continue to lag behind the major urban hubs. Therefore a greater rate of decline in corporate insolvencies could be expected in the major cities, while a less noticeable decline in insolvencies outside of the urban hubs would be expected.”