1,700 firms could go out of business this year, warns insolvency expert
ABOUT 1,700 companies could go out of business this year if current trends in insolvencies continue, a leading practitioner in the area predicted yesterday.
Insolvency and corporate restructuring specialist Kavanagh Fennell has published figures showing that 740 companies have gone out of business so far this year, with 155 of them going to the wall in May alone.
A partner in the firm, Ken Fennell, said the figures indicate that the high levels of insolvencies of the last few years are set to continue in 2012.
“With a total of 740 insolvencies in the year to date it would appear that the overall numbers for 2012 will be in the region of 1,700,” Mr Fennell said.
In keeping with the trends of the last four years, builders were the worst hit in May, accounting for one in four of all insolvencies.
These included Shaflin Developments, owned by Westlife star Shane Filan and his brother Finbarr, to which Ulster Bank appointed Patrick Horkan of KPMG as receiver earlier in the month. The company owed the bank €5.5 million.
Retailers accounted for one in five failures. Shops, pubs and hotels continue to be vulnerable.
Mr Fennell noted consumers remain cautious about spending in the current climate, while upward-only rent reviews are continuing to cause difficulties.
There were three examinerships in May, most notably Eircom, which successfully exited the process with debts reduced to €2.35 billion from €5 billion.
However, most insolvent companies opted for liquidation. Mr Fennell pointed out that changes are needed to the examinership regime, making it cheaper and more accessible for small firms.
He argued that this could result in jobs being saved, as insolvent firms with a reasonable prospect of survival could opt to go this route instead of liquidation.