Adding to the flow of pessimistic predictions for 2010 is Kavanagh Fennell’s insolvencyjournal.ie.  Statistics compiled by insolvencyjournal.ie find that over 1,400 Irish companies were declared insolvent in 2009 – on average four companies a day. The 2009 total represents an 82% increase on 2008 insolvencies (773) and a 287% increase on the 2007 figure (363). Ken Fennell of insolvencyjournal.ie predicts that this rate of insolvency will continue into 2010, with a peak mid-year followed by a gradual reduction in the last quarter of the year. Not surprisingly, the construction industry was by far the worst-affected sector in 2009, with 453 construction companies declared insolvent, representing over 30% of the year’s insolvencies. While failures in the sector dipped in November, the number of construction companies going bust peaked at a year-high figure of 49 in December. That said, the onset of NAMA appears to be putting a floor under the construction sector. According to Ken Fennell: “We’ve seen a bottoming out in construction, you wouldn’t expect to see the same level of collapses there again, especially with Nama coming.”

The insolvencyjournal.ie statistics also highlight the precarious position of the services sector. After construction, the services sector was the next hardest hit with 278 insolvencies – almost 20% of the total. A further 201 companies in the retail industry collapsed in 2009, reflecting the impact of the downturn on consumer spending. High numbers of insolvencies were also recorded in the hospitality (154) – suggesting that 2010 could see a shakeout of hotels and leisure facilities.

Source: www.insolvencyjournal.ie

And what of our much-maligned bankers? As one would expect, they appear to be boxing clever in the run-up to the NAMA tsunami: while receivership cases surged in 2009 as banks moved to recover debt (124 receivers were appointed in 2009, an 118% increase from 2008), banks cut back on receivership appointments in the last month of 2009 – reducing them  from 13 in November to 7 in December. The NAMA game of “cat and mouse” continues.

Declan Curran

Advertisements