[Ireland] Company insolvencies surge under impact of pandemic

In Ireland fears of an escalation in company failure rates have led to renewed calls for the continuation of widespread supports for SMEs, Irish Examiner reports.

The Government has moved to push new rescue legislation into law to make it cheaper, easier and faster for struggling small companies to restructure. But there is growing concern that insolvency rates will increase when COVID-19 supports begin to be phased out. The hospitality sector is a particular area of concern.

New figures from credit risk analyst CRIFVision-Net demonstrate a healthy rise in the number of newly-registered companies in the first half of 2021 yet an equally high number of company failures. The figures show a 42 per cent year-on-year rise - to just under 14,000 - in startup firms in the first half of the year.

However, the figures also detail a 45 per cent increase in insolvencies, rising to 371 companies.

This contradicts recent Deloitte figures, which showed a near 40 per cent drop in insolvency rates during the first half of 2021. However, both surveys highlight significant concerns over the potential for a rise in the number of companies going out of business once pandemic supports start to be removed.

CRIFVision-net managing director Christine Cullen said, “Strong growth in startups across most industries suggests that the Irish business community has identified a new wave of entrepreneurial opportunities during lockdown and are pursuing their development, a marker of businesses’ positive expectations for the future.”

“However, despite these early signs of recovery, many businesses are struggling, and will continue to struggle for the foreseeable future, as evidenced by the increase in company insolvencies.”

Ms Cullen cautioned that insolvencies will increase, “These insolvencies are likely to increase, particularly in the hospitality sector, as government supports are rolled back and credit lines dry up.” So every possible support should be given to protect new companies and ensure their growth and development.

“Time and time again, Irish SMEs have proven to be an invaluable source of employment and revenue for the Irish economy; continuous dialogue between industry and policymakers is now needed to continue growth into the future,” Ms Cullen said.

In Ireland fears of an escalation in company failure rates have led to renewed calls for the continuation of widespread supports for SMEs, Irish Examiner reports.

The Government has moved to push new rescue legislation into law to make it cheaper, easier and faster for struggling small companies to restructure. But there is growing concern that insolvency rates will increase when COVID-19 supports begin to be phased out. The hospitality sector is a particular area of concern.

New figures from credit risk analyst CRIFVision-Net demonstrate a healthy rise in the number of newly-registered companies in the first half of 2021 yet an equally high number of company failures. The figures show a 42 per cent year-on-year rise - to just under 14,000 - in startup firms in the first half of the year.

However, the figures also detail a 45 per cent increase in insolvencies, rising to 371 companies.

This contradicts recent Deloitte figures, which showed a near 40 per cent drop in insolvency rates during the first half of 2021. However, both surveys highlight significant concerns over the potential for a rise in the number of companies going out of business once pandemic supports start to be removed.

CRIFVision-net managing director Christine Cullen said, “Strong growth in startups across most industries suggests that the Irish business community has identified a new wave of entrepreneurial opportunities during lockdown and are pursuing their development, a marker of businesses’ positive expectations for the future.”

“However, despite these early signs of recovery, many businesses are struggling, and will continue to struggle for the foreseeable future, as evidenced by the increase in company insolvencies.”

Ms Cullen cautioned that insolvencies will increase, “These insolvencies are likely to increase, particularly in the hospitality sector, as government supports are rolled back and credit lines dry up.” So every possible support should be given to protect new companies and ensure their growth and development.

“Time and time again, Irish SMEs have proven to be an invaluable source of employment and revenue for the Irish economy; continuous dialogue between industry and policymakers is now needed to continue growth into the future,” Ms Cullen said.