663 corporate insolvencies have been recorded in Ireland in 2023, according to the latest Insolvency & Restructuring Statistics compiled and published by Deloitte Ireland. This represents an increase of 25% from the total number of 530 insolvencies recorded in 2022.
There have been 33 SCARP (Small Company Administrative Rescue Process) appointments in 2023. 78% of these have been successful, saving circa 211 jobs. Of the 33 SCARP appointments, five were unsuccessful resulting in liquidation and 70 job losses and 10 SCARPs are ongoing which impacts 178 jobs. Since its introduction in 2021, there have been a total of 55 SCARP appointments with 35 being successful reflecting a success rate of 76% and resulting in almost 600 jobs being saved.
Commenting on the latest statistics, James Anderson, Turnaround & Restructuring Partner at Deloitte Ireland said: “This year’s statistics show a return to pre-pandemic insolvency activity levels with cautious consumer sentiment, cost inflation and higher interest rates starting to impact many businesses.
Given the high rate of successful outcomes to date, it is evident that SCARP is an effective process which provides SMEs with a timely and cost-effective opportunity to restructure.
“Awareness of the SCARP process (and its benefits) is still not yet widely considered by advisors and business owners/directors but hopefully that will change with time. Its genesis is to provide viable businesses with an opportunity to restructure, however, careful planning and compliance prior to considering/ commencing SCARP is fundamental. Acting early and speaking with your trusted advisors when experiencing financial difficulties on how to resolve legacy debts should be the priority of business owners and directors as this affords more time and options to address matters.”
Creditors Voluntary Liquidations
Creditors’ Voluntary Liquidations (CVLs) continue to account for the majority of insolvencies with 470 (71% of total) in 2023, compared to 383 (72% of total) in 2022. The total of 470 in 2023 represents a 23% increase in CVL activity in 2022.
Court liquidations account for 6% of total insolvencies with 2023 activity levels increasing by 31% to a total of 38, compared with 29 appointments in 2022.
106 Corporate Receiverships were recorded in 2023 (16% of the total), an increase of 23% on 2022, when 86 appointments were recorded.
Despite increasing 60% since 2022, examinership activity levels remained low in 2023 with 16 recorded (2% of total) recorded despite a success rate of over 80%.
Debt warehousing
The latest reported Revenue statistics on warehoused debt at the end of November 2023 indicated the following:
- Almost €1.8 billion of warehoused debt owed by 58,152 businesses (estimated average debt of circa €31,000)
- 10% of businesses owe more than €50,000
- €90 million of debt previously warehoused by 831 businesses was determined as uncollectable due to liquidation
The due date for payment of warehoused taxes is fast approaching and businesses have until May 1st, 2024, to either pay their warehoused debt in full, or agree a Phased Payment Arrangement (PPA). If there is no agreed PPA in place, the entire warehoused debt is due and owing on 1st May 2024. A key component of a PPA is that it will likely include a minimum down payment of up 40% of the warehoused liability, and agreement of same may impact tax clearances.
Sector focus
The Construction Industry recorded 89 insolvencies to date in 2023, representing just over 13% of total insolvencies. This is a notable increase of 62% when compared with 2022, when a total of 55 construction insolvencies were recorded. This is not surprising given the difficulties construction companies are facing around the increasing costs of materials. The Retail Industry recorded 59 insolvencies in 2023, representing 9% of total insolvencies, which represents a 23% increase compared with 48 in 2022.
Regional focus
535 corporate insolvencies were recorded in Leinster to date in 2023, making up 81% of total insolvencies. This is a 37% increase compared to 2022, when 390 insolvencies (74% of total) were recorded in Leinster and is well above the national 25% increase. Munster and Ulster saw small decreases in insolvency activity in 2023 to date, when compared with 2022.
Munster recorded 73 (11% of total) corporate insolvencies to date in 2023 down from 91 in 2022. Connacht saw 39 (6% of total) up from 31 in 2022 and Ulster had 16 (2% of total) marginally down from 18 in 2022.
Insolvency activity in Northern Ireland Insolvency-related activity amongst Northern Ireland businesses is on the rise as interest rates bite. The most recent monthly Insolvency Figures from the Office of National Statistics show activity returning to pre-pandemic levels.
There were 190 corporate insolvencies in the region year to date, a slight decline of 5% from the same period in 2022 (199 YTD 2022).
