Corporate insolvencies rose 41 per cent in the first quarter compared with the same period last year and have more than doubled compared with the first three months of 2022, according to new figures from PwC Ireland.
Some 223 businesses became insolvent in January-March this year, putting this number on track to come in close to 1,000 for 2024 as a whole, exceeding the 850 recorded in pre-pandemic 2019, PwC said.
The firm’s insolvency barometer found that small- and medium-sized enterprise (SME) liquidations continue to be main driver of the increase, accounting for 85 per cent of all business failures in the first quarter.
PwC said the hospitality sector was “feeling the pressure”, followed by retail, with these two sectors accounting for 89 – or 40 per cent – of all insolvencies in the first quarter, up from 68 in the same period last year.
This trend is a continuation of a phenomenon seen in 2022 and 2023, when hospitality consistently had one of the highest failure rates quarter-on-quarter.
The hospitality and retail sectors also have the most warehoused debt with Revenue, it noted. Some €1.7 billion of tax debt remains warehoused by almost 56,700 companies, with 5,000 businesses owing 83 per cent of the total, as the May 1st deadline for agreeing a phased payment arrangement looms closer.
Similar to previous quarters, more than half of all business failures in the first quarter were registered in Dublin.
“With a Covid debt overhang on top of having to deal with a high cost of doing business, some Irish businesses continue to struggle,” said PwC Ireland business recovery partner Ken Tyrrell.
“It is apparent from our analysis that, in order for some of these businesses to survive at least in the short term, a large volume of businesses in the retail, hospitality and construction sectors, among others, will require some form of restructuring during 2024.”
Although the current insolvency rate has doubled to 28 per 10,000 businesses since the 14 per 10,000 rate recorded in 2021, it remains well below the previous peak of 109 per 10,000 businesses seen back in 2012, PwC said.
Meanwhile, a separate report from Deloitte found there had been 214 insolvencies in the first quarter, up 47 per cent. It expects insolvencies to exceed 800 by the end of the year.
It highlighted an increase of 142 per cent in hospitality sector insolvencies, saying 35 of the 46 insolvencies in this sector in the January-March period had been restaurants and cafes. The sector is expected to suffer “continued distress” amid a number of cost pressures, it warned.
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