The number of corporate insolvencies in Ireland for the first three quarters of 2022 has risen 36% year-on-year to 378, according to Deloitte.

The professional services company has forecast a further 125 corporate insolvencies for the third quarter, based on the 83 insolvency events registered in July and August, with a sharp increase in uptake of the small company administrative rescue process (SCARP) last month.

David Van Dessel, partner for financial advisory at Deloitte, said that businesses are under pressure from rising inflation, higher interest rates and spiralling energy costs.

"Based on current insolvency activity levels and trends it now appears that the previously forecasted wave of insolvencies is becoming a reality," Van Dessel said.

“While businesses will be hopeful of government support being announced in the upcoming budget, we advise those already struggling to consider their options at the earliest opportunity, as early action is a key factor in successful turnarounds."

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He added that companies will be impacted by consumers reducing their discretionary spend and that the Revenue's decision to issue payment demands against businesses in default on taxes will put further distress on firms and accelerate insolvency activity.

"Recent reports that 84,000 businesses had warehoused circa €2.8bn in tax debt as at the end of July 2022, which is only slightly lower than the warehoused figure of €3bn as at the end of January 2022, are a worrying indicator of heightened insolvency risk as interest rate costs begin to bite," Van Dessel added.

"Interest will begin to accrue on most of that debt from 1 January 2023, after which point repayment plans will need to be agreed with the Revenue Commissioners."

Creditors Voluntary Liquidation has accounted 70% insolvencies to date this year.

Corporate receiverships are forecasted to see a 33% year on year increase from 59 to just under 80 by the end of Q3 2022, and court liquidations are also forecast to increase from 15 in Q3 2021 to 20 by Q3 2022. 

There has been a recent sharp increase in the uptake of SCARP, with six rescue processes commencing in August.

The services sector is projected to account for half of insolvencies by the end of Q3, with financial services accounting for 20% of the overall total.

Holding companies and business and management consultancy companies accounted for the majority of insolvencies within the financial services sub-sector.

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