875 corporate insolvencies were recorded last year – the highest number since 2016.
New figures from Deloitte show that SMEs continue to be the worst affected.
The services sector recorded the highest number of insolvencies, followed by hospitality and retail.
There was a significant increase in the retail and hospitality sectors, up 64% and 48%.
Leinster had the highest number of insolvencies last year with 677 – that is just under 80% of all insolvencies recorded.
The report lists a number of reasons for the high levels on insolvencies.
These include the higher cost of doing business for SMEs, the ending of the debt warehousing scheme, and limited working capital supports.
Unfortunately, the outlook is not much better for this year and Deloitte expects the insolvency figures to top 1,000 for 2025.
Deloitte’s analysis shows that 76% of the insolvencies were Creditors’ Voluntary Liquidations (CVLs) – a process in which businesses enter liquidation when they can no longer meet their financial obligations.
Only 3.5% of insolvent companies went through SCARP (Small Companies Administrative Rescue Process) which amounts to just 30 of the 875 total, compared to 33 in 2023.
James Anderson, Turnaround & Restructuring Partner, Deloitte Ireland said the increase in insolvencies in Ireland in 2024 was largely down to higher costs of doing business for SMEs, the ending of debt warehousing in 2024 and the limited working capital supports available resulting in the business owners using personal resources to meet cashflow pressures.
“Small businesses, in particular, are being affected by these issues,” Mr Anderson said.
“The SCARP process was introduced to help businesses to restructure debts, however, take up levels remain lower than anticipated. The availability of an opt-out provision for state creditors agency is unique when considering international corporate restructuring processes and this is impacting take up levels,” he said.
“Given the issues that were central to the high level of insolvencies in 2024 are likely to persist in 2025, we are forecasting that the number for this year will surpass 1,000,” he said.
“This is based on the average annual increase of insolvencies from 2022 to 2024 being 30%, applying a 15% increase to 2024 figures brings the total to 1,006,” he added.
Article Source – Corporate insolvencies reach highest level since 2016 – RTE
