2013 business failures down 19% compared to 2012
2013 sees decrease in number of insolvencies across all sectors in 2013 except motor industry, with retail accounting for 14% of total insolvencies
Print6 January 2014
The latest insolvency statistics published by www.insolvencyjournal.ie, show business failures for 2013 have totaled 1,365. This is a 19% reduction on totals of 1,684 for 2012 and a 17% decrease on the 1,638 total for 2011.
Geographically Leinster accounted for 64% of all insolvencies, with Munster accounting for 23%, Connaught 9% and Ulster just 4%.
Looking at the industry breakdown, construction was yet again the hardest hit sector, accounting for 25% of total insolvencies. There was, however, a year on year decrease of 16% with 347 construction insolvencies in 2013 compared to 415 for 2012. Some high profile cases during the year included, Belmayne, the large housing development in north county Dublin which entered receivership with debts of €150m along with the examinership of the 100 year old business SIAC Construction.
The retail sector accounted for 14% of all insolvencies for 2013 totalling 190, showing a decrease of 14% compared to 2012. Online shopping has become a major issue for retailers and a significant amount continue to struggle. However as the winter sale season got underway on St. Stephens Day Retail Excellence Ireland confirmed its biggest sales success since Christmas 2008 with retailers reporting an overall increase of 20% in sales this year so far. According to David Fitzsimons of Retail Excellence Ireland: "The sales period after Christmas each year is worth approximately €900m to Irish retailers, but we could easily top the €1bn mark this year, given the start we’ve seen".
2013 saw many high street retailers entering an insolvency process such as the examinership of Pamela Scott and Homebase, both exiting the process successfully. There was a receiver appointed to HMV in early 2013 and the business was later bought by Hilco who reopened four of the stores in Ireland. Fashion retailer A-Wear entered examinership in October but a receiver was appointed in November and some of the stores have reopened while a buyer is being sought.
Insolvencies in the hospitality industry also decreased from 171 in 2012 to 163 in 2013, a 5% drop. In fact, there has been a decrease in insolvencies across all industries during 2013 apart from the motor sector which has recorded a 43% increase from 30 in 2012 to 43 in 2013.
Receivership totals for 2013 reached 363 a 9% drop on totals for 2012 (399). These receivership totals do not include personal asset receiverships. It was recently reported that Irish banks have appointed rent receivers to close to 2,000 properties, the information emerged in a Dail reply by Minister for Finance Michael Noonan. Rent receivers are appointed where landlords are collecting rent but not passing it on to the financial institute to pay the mortgage arrears. According to a RTÉ article, Bank of Ireland had appointed rent receivers to over 1,235 properties by the end of June with AIB appointing rent receivers to over 540 properties.
Examinerships for 2013 are at 21, which is a 22% drop on totals for 2012 (27). Liquidations, including both Court Liquidations and Creditor Voluntary Liquidations totalled 981 for 2013, a 22% decline on 2012 totals of 1,258.
On Christmas Eve, President Michael D Higgins signed the Companies (Miscellaneous Provisions) Bill into law which means that SME’s who fulfil certain criteria relating to size of staff and turnover can now apply to the circuit to avail of a cheaper examinership as opposed to the more expensive High Court process. Retail Excellence Ireland (REI), who lobbied the government to introduce measures to combat upward only rents, said it was working with "17 companies that are now actively considering examinership" and it is expected that many retailers will use this new process. David van Dessel, partner at Kavanaghfennell, the firm who compiles the data believes there will be strong take up of this new ‘examinership light’ as an alternative to liquidation.
2013 also saw the opening of the greatly anticipated Insolvency Service of Ireland (ISI). The service is now up and running and in October we saw the first personal insolvency case come before the Courts which resulted in a Debt Settlement Arrangement (DSA) being approved. ISI have said they intend to provide quarterly statistics once a statistically meaningful number of applications have been processed. However according to Stubbs Gazette a total of 157 Irish citizens were bankrupted in Britain this year compared to 106 last year, an increase of 48%. There was also a 49% increase in the number of bankruptcies in Ireland, from 96 to 143. Managing director of Stubbs Gazette, James Treacy has said they are predicting close to 7,000 bankruptcies next year as a result of the reduction in the bankruptcy discharge period from 12 to 3 years along with the reduction in costs associated with bankruptcy.
David Van Dessel commenting on the outlook for 2014, predicted a likely rise in corporate receivership activity. "Although I anticipate the incidence of corporate insolvency will continue to fall, I do not anticipate the drop will be significant in 2014, as I am of the view that the pillar banks, who are the probably the main bankers to our SME sector, have been forbearing of struggling companies during the recession and to date have been reluctant to appoint receivers. This position is not tenable in the long term and I anticipate that we are approaching a point in time when banks will have to take action against companies that are in significant long term arrears. This is likely to lead to an increase in corporate receivership activity in 2014, as well as an increase in examinership applications particularly under the new examinership legislation which is specifically tailored to our SME sector. I would also anticipate a drop in liquidation activity, brought about by a move by directors of SME companies to avail of the new examinership legislation in an attempt to avoid liquidation."
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