A total of 146 corporate insolvencies were recorded in Ireland in the first quarter of 2023, according to the latest insolvency statistics published by Deloitte. This represents an increase of 22% from the same quarter in 2022, when 120 incidents were recorded.
However, it is worth noting that the number of insolvencies is marginally down from 152 in Q4 2022, which means we are not currently experiencing a steep increase in corporate insolvency activity, which many have forecasted.
Commenting on the figures, David Van Dessel, Partner, Financial Advisory at Deloitte said:
Creditors’ Voluntary Liquidations (CVLs) accounted for 68% of the insolvencies in the first quarter of 2023, with a total of 100 CVLs. This represents an increase of 67% from Q1 2022, when 60 CVLs were recorded. However, the average number of CVLs per calendar quarter in 2022 was 96, an average that is in line with the 100 CVLs in Q1 2023. The increase in CVL activity from Q1 2022 is something that has gradually materialised during the entirety of 2022 due to several factors including the economic damage of Covid restrictions, rising interest rates, lack of consumer spending and cost inflation.
24 Corporate Receiverships were recorded in Q1 2023, representing 16% of insolvencies in the quarter. This marks a 44% decrease year-on-year with 43 such receiverships recorded in Q1 2022. However, there were triple the number of receiverships in Q1 2023 when compared with Q4 2022, with just eight recorded in the last three months of the previous year.
The level of Court Liquidations remained low, with seven recorded in Q1 2023 compared with 10 recorded in Q1 2022, and 10 in Q4 2022.
There were 11 SCARP appointments and four examinership appointments in Q1 2023. When examinerships are combined with the new SCARP process - both being restructuring procedures - the total number of restructuring events in Q1 2023 amounts to 15, which is over double the number of restructuring procedures in Q1 2022 (7).
Van Dessel commented.
Similar to previous quarters, the wide-ranging ‘services sector’ recorded the highest number of corporate insolvencies in the first quarter of 2023 at 46, representing just under one third of all insolvencies during the period. This marks an increase from 32 insolvencies in the services sector in Q4 2022.
Within the services sector, financial services saw 14 insolvencies, representing 10% of insolvencies recorded in Q1 2023. The firms in financial services included holding Companies, business and management consultancy companies, a financial leasing company, and an accounting services company. The fitness and beauty industry reported six insolvencies and the technical and professional services and real estate services both recorded five insolvencies, with the remainder of the services sector being classified as ‘other services’.
Outside the services sector, the construction sector saw 21 insolvencies in Q1 (14% of total) which represents a 24% increase from Q4 2022, when there were 17.
The hospitality sector recorded 19 insolvencies in the first quarter of 2023, a decrease from 35 in Q4 2022. However, this is a significant increase compared with Q1 2022 when there were just four hospitality related insolvencies.
The retail sector recorded 16 insolvencies in Q1, representing a 50% increase from Q1 2022 when 10 were recorded. However this was a 20% decrease from the 20 retail insolvencies recorded in Q4 2022.
The manufacturing sector reported 12 insolvencies in Q1, while the IT, Transport and wholesale sectors recorded 9, 7 and 6 respectively. There were 10 insolvencies in sectors classified as other business activities ’.
In line with previous reports, the highest number of corporate insolvencies in Q1 2023 were recorded in Leinster, with 114 insolvencies (78% of total – up slightly from 74% in 2022). Munster saw 18 insolvencies (12% of total), Connaught saw 11 insolvencies (8% of total) and there were three insolvencies in Ulster (ROI counties only) only).
In terms of any possible trends for the remainder of the year, Van Dessel said there could be up to 600 corporate insolvencies in 2023:
In addition, according to figures from the Revenue Commissioners, as of March 2023 there was €2.3bn of warehoused tax debt [a measure introduced by the Government to assist businesses during the pandemic] that remained outstanding. This balance related to 67,000 businesses who are availing of the debt warehousing. The vast majority of the debt relates to less than 10% of these 67,000 businesses.
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