Corporate insolvencies in 2016 were down 2 per cent on the previous year, indicating a further improvement in economic conditions.
Deloitte’s insolvencyjournal.ie website said there were 1,032 cases last year, down from 1,049.
The services sector recorded the highest level for the year with 329, an increase of 65 per cent.
However, the retail industry posted a 38 per cent decrease (from 154 to 96).
Creditors’ voluntary liquidations (CVL) accounted for the majority of insolvencies with 626 (61 per cent).
This was down 14 per cent from the same period last year, when 729 CVLs were recorded. Receiverships accounted for 346 (34 per cent), up by 38 per cent from 251 in 2015.
"While this increase in the service sector failures may seem counter-intuitive, it often occurs as the economy emerges from a recession," said David Van Dessel, partner at Deloitte Restructuring Services.
“Many companies have spent so long in survival mode that when new orders do start to finally come through they often rush to take advantage and can end up overtrading and running out of cash.
“This problem is compounded by the difficulty companies can still face accessing financing and loan facilities and, as can be seen from Insolvency Journal’s statistics, this can be fatal.”
There were 45 court liquidator appointments in the year, a slight reduction from 50 in 2015. In 22 of these cases, the Revenue Commissioners brought the petition to wind-up.
Examiners
Fifteen examiners were appointed during the year, representing 1 per cent of insolvency appointments in the period.
The website noted smaller SMEs can explore this type of restructuring through use of the “super-lite examinership”, section 450 schemes of arrangement, a cheaper option with less court process.
"The European Commission has recently proposed a new directive aimed at streamlining the restructuring process across Europe, " Deloitte said, launching the 2016 statistics.
“The proposal aims to increase the opportunities for businesses in difficulty to restructure at an early stage to prevent business failure.
"[It] aims to redevelop the culture around seeking restructuring assistance, an initiative that hopefully will encourage company directors in Ireland to seek assistance before it's too late."
In a geographical breakdown, the highest number of corporate insolvencies was in Leinster (66 per cent); Munster had 22 per cent, Connaught had 9 per cent and Ulster 3 per cent.
"While we aren't seeing the low levels of insolvencies recorded during the so-called Celtic Tiger years, it may be that the particularly low numbers seen in 2007 and 2008 were outliers themselves and the levels of this year and last are a more realistic baseline to compare future levels to," Deloitte said.
“This is reflected in the low percentage difference between the total insolvencies in the current period and the same period in 2015.”
