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Fewer firms have gone bust so far this year – but the effect of Brexit is still unknown

CORPORATE INSOLVENCIES IN Ireland were down 25% in the first half of 2019, according to Deloitte figures, but the impact of Brexit has yet to be felt.

Deloitte’s latest report showed that there were 310 insolvencies in the first six months of 2019, compared to 435 in the same period in 2018.

The services industry made up 40% of these latest insolvencies with financial services making up a big chunk of that. The construction industry came up second.

Creditors’ voluntary liquidation is the most common means of addressing insolvency, accounting for 66% of cases in the first half of 2019 – although it’s a 2% drop on 2018 figures.

David van Dessel, a partner at Deloitte, said that timing remains the biggest challenge for companies that are facing insolvency and that voluntary liquidation is often the last option available.

“There is a natural tendency for entrepreneurs to attempt to deal with their financial problems independently. The number one response is to attempt to increase sales rather than cutting costs.”

This strategy can lead to entrepreneurs using up crucial financial resources.

“When that strategy doesn’t work, they’re basically in a cul-de-sac and they pick up the phone and maybe ring their accountant and say, ‘I’m in a bit of a bind.’”

Van Dessel said examinership – where a court-appointed examiner assists the company in salvaging the business – is an under-utilised avenue for restructuring a company in trouble.

The majority of companies that opt for examinership return to trading, he said.

Examinerships take longer to see through and directors attempting to address financial struggles on their own will use up valuable time.

“The number one enemy of a restructuring is time. A late start can be detrimental,” van Dessel said.

“Directors understandably seek external advice later than they should … They’re fearful of losing the company and it’s very understandable.”


Deloitte’s latest numbers acknowledge that the full impact of Brexit on insolvencies won’t be evident until 2020 figures begin to emerge.

In particular, a no-deal divorce – which, with new UK prime minister Boris Johnson, has become a distinct possibility – would have a “material impact on insolvency levels”, van Dessel said.

“We had a long difficult recession. That finished a number of years ago and companies have been able to begin to recover from that very difficult time period,” he said.

“It’s an open question as to how much of a capital buffer SMEs have to weather a storm like Brexit.”

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