Over 1,500 firms go out of business over debts

AN AVERAGE of 30 companies went to the wall and an estimated 1,075 jobs were lost every week during 2010, according to figures released yesterday.

Information compiled by corporate restructuring specialists Kavanagh Fennell, publishers of the Insolvency Journal, show that more than 1,500 firms went into liquidation, receivership or examinership in the Republic because they were unable to pay debts.

At the same time, business lobby group the Small Firms Association said more than 60,000 redundancies were notified to the Department of Enterprise during the year.

Ken Fennell, partner with Kavanagh Fennell, said there was no relief in the rate at which companies were declared insolvent last year. However, he noted that the increase of 8 per cent over the 2009 total was not as big as had been been expected.

Construction headed the list, with 472 casualties, close to 30 per cent of the total.

The sector’s high-profile failures included the Pierse and McNamara groups which went under in November.

According to Mr Fennell, this had a knock-on effect on the next worst-hit sector, services, where there were 279 insolvencies and businesses such as architects and quantity surveyors suffered.

Sectors which depend heavily on consumer spending were next in the firing line. Hospitality and tourism had 194 insolvencies, including City West Hotel, Johnstown House and the Killeshin.

Retailing was similarly badly hit. There were 177 failures on the high street, including bookstores Hughes Hughes and DVD rental outfit Chartbusters.

Mr Fennell predicted that hospitality and retailing could expect to have further closures this year.

Christine Cullen, managing director of business information firm and risk assessment agency Vision Net, said the bad debts left by insolvent firms had a knock-on effect.

Many of their suppliers were left with just a fraction of the original debt, with no chance to recover the rest. “This in turn is having a domino effect in that cashflow is drying up and banks are nervous to lend,” Ms Cullen said.

Against this background Vision Net’s figures indicate that new companies registered in the Republic increased in 2010.

According to Vision Net, 14,015 new limited companies were incorporated in the Republic last year, an increase of 5 per cent on 2009.

Close to 28,000 new businesses registered their names, an increase of 8.5 per cent.

Employment outlook: small firms call for retraining

JOB CREATION must be at the heart of any recovery strategy, a leading business lobby group warned yesterday.

Small Firms Association director Avine McNally pointed out that 1,075 jobs were lost every week in the Republic during 2010, and said the outlook for employment was poor for 2011.

Ms McNally said job creation must be placed at the centre of any recovery strategy.

She argued that the Government needed to work to address a mismatch between supply and demand in the jobs market.

Ms McNally argued that the figures show that while jobs are being lost in low-skilled areas, there is still a shortage of workers in areas such as IT.

As a result, she said that any recovery to date had been concentrated in exports, but the more labour-intensive domestic sector had been left behind.

She added that retraining workers was the only way to avoid a long period of structural unemployment.

At the same time, she said that while businesses were tackling their costs, the Government was not doing enough to rein in the rate at which the State spends money.

This means that businesses are still trying to cope with costs that are outside their control, but within that of the Government.

“In the absence of reductions in these costs, small businesses will continue to have to further reduce the costs that are within their control, and this will inevitably mean a further loss of jobs,” she warned.