THE NUMBER of companies that went into receivership more than doubled last year to 124, as banks increasingly moved to have receivers appointed to recover their debts.
New figures from InsolvencyJournal.ie show a 118 per cent rise in receiverships, as the total number of insolvencies increased 82 per cent to 1,406.
However, Ken Fennell of Kavanagh Fennell, the accountancy firm behind the website, said a drop in the appointment of receivers by creditors in the month of December could suggest that Irish banks are “boxing clever” before the establishment of the National Asset Management Agency (Nama).
The number of receiverships – the process whereby a secured creditor applies to the court to have a receiver appointed to sell the company’s assets so they can recover their money – peaked at 21 in August. But just seven receivers were appointed in December, compared to 10 in the same month in 2008.
“It could be partly the time of year, but there is a ‘let Nama happen’ feeling as well. Let some of the debts get into Nama and see what happens, that’s the thinking,” Mr Fennell said.
InsolvencyJournal.ie was launched by Kavanagh Fennell in February 2009 to track the soaring number of company failures in Ireland.
However, although total insolvencies rocketed as Ireland’s recession deepened, a breakdown of the different types of insolvencies reveals other changes in corporate recovery practices occurred throughout the year.
The number of examinerships, the process whereby court protection is obtained to assist the survival of a company, declined from 62 cases in 2008 to 37 in 2009.
The drop is partially explained by the granting of court protection to 13 companies in the Thomas Read group in 2008, inflating that year’s figures.
But Mr Fennell said it was clear that the High Courts had also sought more realistic bids for survival from companies and that companies had also become “more wary of the process” following rulings made in relation to developer Liam Carroll’s Zoe group.
During 2009, both the High Court and the Supreme Court refused to grant protection to six companies in the Zoe Group. The courts ruled that the companies’ chances of survival were “significantly improbable”.
A Supreme Court ruling is pending on whether a survival plan for three companies in the Fleming building group can go ahead. The survival scheme was approved in the High Court in November, but ACC Bank, which opposed the scheme, has appealed the decision, arguing that it prejudices the bank’s ability to recover some €22 million owed to it by the group.
Mr Fennell said examinerships could “come back into play” in sectors such as retail next year, but that there would “definitely be fewer” such rescue bids in the construction sector.
“It’s great legislation for the right companies,” Mr Fennell said of the examinership process.
InsolvencyJournal.ie’s figures show that creditors’ voluntary liquidations, whereby a liquidator is appointed to the company by the creditors of the insolvent company, was the most common type of insolvency in 2009, as in previous years, accounting for 1,139 of the cases.
2009 company failures in numbers:
- Total insolvencies: 1,406
- Creditors voluntary liquidations: 1,139
- Court liquidations: 106
- Examinerships: 39
- Receiverships: 124
