Business

Number of firms going bust rose in the first six months of the year even as pace of failures slows

Rate of insolvencies still well below the financial crisis a decade ago

The pace of failures slowed in the second quarter of the year, the PwC Insolvency Barometer said. Photograph: Jakub Porzycki/NurPhoto via Getty Images

Ciara O'Brien
Thu Jun 27 2024 - 00:01

Company insolvencies rose 25 per cent in the first six months of the year, two separate reports have found, as business failures continued at a steady rate.

But the pace slowed in the second quarter of the year, the PwC Insolvency Barometer said, falling by 15 per cent compared to the first three months.

Figures from PwC and a separate report from Deloitte, more than 400 businesses were insolvent in the first half of the year, up from 331 in 2023. Of that, 223 were in the first three months, with 188 in the second quarter, a 10 per cent rise year on year.

That equates to a rate of 29 insolvencies per 10,000 businesses, more than double 14 per 10,000 businesses recorded in 2021. Business failures reached a peak in 2012, when the rate was 109 per 10,000 businesses.

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The ending of the Revenue’s Debt Warehousing scheme in May has yet to show any significant impact on insolvencies, with 93 per cent of the €3.2 billion of debt that was covered by the scheme either paid off or subject to repayment schemes. Around €100 million of debt from more than 7,000 businesses has yet to be resolved, and will be subject to enforcement and collection procedures.

“The debt warehousing scheme supported businesses in Ireland during a difficult and uncertain period. The vast majority of companies who availed of it are now either engaging with Revenue or have cleared off their debts,” said James Anderson, Turnaround & Restructuring Partner, Deloitte Ireland. “This shows it was a good decision to introduce it and confirms that such emergency measures for businesses can have a positive impact during turbulent times.”

More than half of insolvencies in the first six months of the year were in retail, hospitality and construction, while SME liquidations accounted for 83 per cent of insolvencies in the second quarter. Hospitality saw rate of 17 per 10,000 businesses, versus retail at 7 per 10,000 businesses, and construction at six.

The difficulties experienced by some sectors could be exacerbated by the introduction of the mandatory pension scheme in September this year, along with the overall higher cost of living impacting discretionary spend.

“PwC’s Insolvency Barometer shows that the annual insolvency rate remains steady but signs are that it is returning to the higher pre-pandemic levels. In an environment with a growing economy, robust fiscal returns, almost full employment and falling inflation, the overall insolvency level remains relatively low and well below the long-term average. However, some consumers are still concerned about their personal financial situation and remain cautious on spending,” said Ken Tyrrell, Business Recovery Partner, PwC Ireland.

Rescue processes were low, with six examinerships and 14 SCARPs in the six month period. Figures from Deloitte showed the number of SCARP appointments had fallen year on year, a development that was concerning, the company said.

“This scheme continues to attract low numbers of companies, despite the positive impact it has had on those which have used it. We know SCARP can be successful in saving jobs and we would urge the Government to further invest in raising awareness of this process and its benefits.”

A total of 68 SCARP appointments have been made since the system was introduced at the end of 2021.

Ciara O'Brien

Ciara O'Brien

Ciara O'Brien is an Irish Times business and technology journalist

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