Corporate insolvencies showed signs of levelling out in the first half of 2016, although the services industry is still volatile, with insolvencies up by 93% on the same period last year.

The latest insolvencies analysis from Deloitte for H1 2016 noted that the number of appointments in the period totalled 510, a 3% decrease on the same period in 2015, based on the latest figures released today and published on www.insolvencyjournal.ie.

The service industry, which recorded the most insolvencies in H1 2016 with 135 appointments, saw a 93% increase on the same period last year.

Further analysis showed that of these 510 corporate insolvencies, creditors’ voluntary liquidations accounted for the majority, with 313 recorded in the period (61%). This is down 14% from the same period last year, where creditors’ voluntary liquidations accounted for 362 of the 525 appointments recorded.

Receiverships accounted for 165 (32%) of the total corporate insolvencies in H1 2016, up 27% on the same period last year. There were 25 court liquidator appointments in the current period, down by only one from the same period last year. In the majority of these cases the Revenue Commissioners took the petition to wind up.

In Association with

Examinerships

Examinerships continue to remain at low levels and H1 2016 saw only seven examiners appointed, well under 2% of all appointments. Deloitte said that the continuing low levels of examinership take-up showed that the introduction of new legislation in early 2014 has not had the intended effect of encouraging more struggling SMEs to avail of the option.

David van Dessel, a partner in Deloitte, said: “This large increase in receivership appointments represents an interesting change in the mix of insolvencies.

“However, despite this change, we are still not seeing an uptake in the levels of examinerships. The recent successful examinership of Druid’s Glen shows that where a business is viable, examinership is a key tool to promote survival and is a real proof point of the benefits of this option.

“For smaller SMEs there are still options to explore this type of restructuring through use of the ‘super-lite examinership’ - the s.450 schemes of arrangement. Typically this is a less costly option that involves less court involvement but affords struggling companies a real chance at survival.”

Geographic Spread

Geographically, the highest number of corporate insolvencies in the period was recorded in Leinster, with 67% of total appointments. Munster had 21% of appointments, Connaught 9%, and Ulster just 3%.

After the service industry insolvency rate, the construction industry recorded the second highest level of appointments, at 89. This was up 46% from the last quarter.

Van Dessel continued: “Looking generally at recent results, it may be that we are now entering a period where the total number of corporate insolvencies begins to level out somewhat.

“While we aren’t seeing the low levels of insolvencies recorded during the so-called Celtic Tiger years, it may be that those 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.

“This may be reflected in the low percentage difference between the current period and the same period in 2015.”