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21% decrease in corporate insolvencies in Q3 2019

Nov 08, 2019
According to new figures released by Deloitte on the latest insolvency statistics, there has been a drop in corporate insolvencies. In Q3 YTD 2019 the level of insolvencies stood at 439. When compared with Q3 YTD 2018 (557) this represents a decrease of 21%, a marginally higher decrease than the 18% decrease recorded on Q3 YTD 2017 figures. 

78% (343) of insolvent companies were incorporated more than five years ago and this suggests that the majority do not relate to ‘start-ups’, which entities are generally considered to be less than five years in business. 

A little over a fifth of companies (22% or 96 companies) that became insolvent during the nine month period relate to companies less than five years old, 23% (100) are in the 5-10 years bracket, 25% (112) are in the 10-20 years bracket, 16% (72) are in the 20-30 years bracket, 7% (29) are in the 30-40 years bracket and 7% (30) are over 40 years old. 

Types of Insolvencies

A more detailed analysis of the figures recorded show:
  • Creditors’ voluntary liquidation (CVLs) accounted for the majority of insolvencies, with 280 CVL insolvencies recorded in the period (64%). In the comparable period in 2018, creditors’ voluntary liquidations accounted for 379 (68%) of all incidences recorded. 
  • The Court liquidation (CL) process has increased with 50 court appointments or wind up petitions recorded in the period. In Q3 YTD 2019, the CL process represented 11% of total insolvencies and is a significant increase on Q3 2018 YTD figures when 39 court appointments or wind up petitions were recorded representing 7% of overall insolvencies in that period. 
  • Receivership appointments over corporates and corporate assets (84) have remained broadly consistent with the same period last year (106) when analysed as a percentage of overall insolvencies (19%). The figures suggest that the decline in Receivership activity recorded in recent years has now levelled out and a further decline in corporate Receivership activity over the next year is not generally anticipated as acquirers of loan books in 2018 and 2019 work through non-performing loans and enforce over company assets on foot of charges held. Most of the activity has continued to develop in the personally held real estate sector, which includes all property segments, such as industrial, office spaces, retail and residential. 
  • Examinership as a percentage of overall Corporate insolvencies has remained consistent with the same period for 2018 with 25 appointments (6%) recorded in Q3 YTD 2019 versus 33 (6%) recorded in Q3 YTD 2018. The persistent low levels of examinership appointments recorded may reflect, amongst a variety of other factors, an unwillingness of management to take early action to restructure a business in difficulty.
(Source: Deloitte)