1,012 companies have failed so far this year

FIRMS CLOSING:MORE THAN four companies a day collapsed in the first eight months of the year, as insolvencies soared by 14 per cent to over 1,000, buoyed by corporate failures in the construction, services and hospitality sectors.

Receiverships also jumped to new levels, increasing by 94 per cent on the same period in 2009, according to statistics compiled by Kavanagh Fennell.

In the first eight months of the year, 1,012 companies failed, with the Dublin area accounting for the largest number of failures, at 414. While the lowest number of insolvencies since January 2009 was recorded in August, at just 95, the number of companies collapsing is nonetheless expected to rise again before the end of the year.

Ken Fennell, a partner with Kavanagh Fennell, attributed the decline in August to a likely “traditional seasonal slowdown”, and expects the last quarter of this year to show a “substantial increase” in the number of insolvencies, given that in 2009, almost one third of total insolvencies for the year were recorded in the last quarter. The construction sector accounted for one in three insolvencies, as 309 construction firms collapsed in the first eight months of the year, an increase of 5 per cent on the same period last year.

However, the failure rate does appear to be slowing down, and according to Mr Fennell, “there are definite signs that the construction sector is close to the bottom”.

Insolvencies in the services sector increased by 8 per cent, with 187 companies going to the wall in the first eight months of the year, while failures in the hospitality trade jumped by 27 per cent, with 128 insolvencies.

And, despite the apparent success of the car scrappage scheme, which was introduced last December, 32 firms in the motor trade sector nonetheless went bust so far this year, just two less than the same period last year.

The retail trade is faring better, with the latest statistics indicating that the sector appears to have reached the floor, with no change in the level of insolvencies, at 124, recorded for the same period in 2009.

The latest statistics also indicate how the examinership process, which can be used to facilitate the recovery of troubled companies, is in decline.

In 2009, examiners were appointed to 24 companies, but so far this year only nine have been appointed.

There is no slowdown in receiverships, with receivers appointed to 12 companies in August, bringing the total number of Irish firms now in receivership to 155. This represents a 94 per cent increase on the same period last year and is up 400 per cent on 2008 figures.