Corporate insolvencies were up 60 per cent in the third quarter, with the annual figure likely to be at its highest level since 2017, according to Deloitte.
There were 238 corporate insolvencies in the quarter, which brought the total for the year to date to 650. That is an increase of 36 per cent compared to the same period in 2023.
The hospitality sector continued to see significant increases in insolvencies, with 108 so far in 2024, which is 61 per cent up on the same period in 2023 and significantly higher than the same periods in 2021 and 2022 when there were just 26 hospitality insolvencies.
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Following a number of recent high-profile restaurant closures, Deloitte said the increase was “likely due to increased labour and energy costs, as well as the VAT rate at 13.5 per cent and insurance costs”.
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Deloitte Ireland turnaround and restructuring partner James Anderson said small and medium-sized firms have been disproportionately affected, accounting for about 98 per cent of all firms going bust.
“In Deloitte’s last quarterly update, we forecasted that Ireland was on course for more than 800 insolvencies in 2024, but it is now likely that it will be closer to 900,” he said.
“At the current activity level, corporate insolvencies in 2024 are on track to be 30 per cent greater than 2023 with forecasted activity to be in line with 2017, which had 874 appointments.
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Deloitte said the hospitality and retail sectors had accounted for 28 per cent of activity levels in 2024, both of which significantly increased from the same period in 2023.
“These stark figures reinforce how the cost of doing business in Ireland in recent years has significantly increased,” said Mr Anderson.
The increase in insolvencies in the quarter was driven by voluntary liquidation activity, which saw a 38 per cent increase compared with the same period last year.
Some 272 jobs were saved by the Small Company Administrative Rescue Process (Scarp) in the quarter, Deloitte said.
Aimed at small and micro companies, Scarp aims to facilitate simplified out-of-court debt-restructuring for small businesses deemed to be viable. A process adviser is appointed under the scheme to prepare a rescue plan and to work with creditors to consolidate company debts.
There were nine Scarp appointments, bringing the total to 22 in 2024.
As in previous periods, the wide-ranging services sector accounted for the highest proportion of corporate insolvencies with 237, representing 36 per cent of the total recorded in the first nine months of the year.
Within the services sector, financial services and holding companies accounted for the highest incidence of insolvencies with 76 so far in 2024.
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