Business failures barely rose last year despite the economic challenges posed by the Covid crisis, new figures show. Measures deployed by government during the pandemic had helped to sustain companies during the year, said accountants Deloitte, which compiled the figures.
The number of corporate insolvencies rose by just 1 per cent to 575. This compares to 568 insolvencies in 2019.
"In addition to government supports, many struggling companies continue to receive support from their banks, landlords and trade creditors, as the uncertainty caused by the pandemic has resulted in high levels of creditor forbearance," said David Van Dessel, a partner at the Big Four accountancy firm.
The services sector recorded the highest number of corporate insolvencies in 2020 at 225. This amounted to 39 per cent of all insolvencies.
Within this category, financial services experienced 85 insolvencies with 11 of these related to a single group.
Also within the sector were 40 insolvencies recorded in health, fitness and beauty, up from 26 a year earlier.
Outside the services sector, retail saw the second-highest number of insolvencies recorded at 103, representing an 18 per cent increase when compared to 2019.
Hospitality remained relatively constant on the previous year, with 88 insolvencies,or 15 per cent of all insolvencies. The construction sector saw 65 insolvencies in 2020, a decrease of 31 per cent when compared to 2019.
“The latest insolvency statistics are likely to conceal the true level of corporate distress, particularly among sectors highly impacted by the pandemic, such as aviation, hospitality and retail,” said Mr Van Dessel.
“There will likely be a delay and a resulting accumulation of corporate insolvencies, particularly for the companies affected who are benefiting from support measures and creditor forbearance, which are therefore surviving artificially in the short term,” he added.
