SIX FIRMS HAVE collapsed each day so far this year – and those that have managed to remain in operation owe more than €142 million, according to newly released figures.
Between 1 January and 20 March, 462 companies were declared insolvent, according to figures released by business and credit risk analyst firm Vision-net. Of those declared insolvent, 266 were liquidated, 189 entered receivership and seven had examiners appointed to them.
Some 31,070 companies were stress-tested by the firm in the first quarter of the year and, of those, 15,485 (50 per cent) were deemed “high risk”, 17 per cent were deemed “medium risk” and 31 per cent were deemed “low risk”.
According to the figures, 261 Irish companies have held a meeting of creditors – marking a 9 per cent drop on the figure for the same period last year. According to their latest filed accounts, these companies owe their short-term creditors €142.3 million.
“Despite the Government’s recent jobs action plan and labour market activation measures, trade mission to China, and strong export performance buoyed by our thriving multinational corporation sector, the domestic economy is struggling to support business growth and stimulate positive consumer and investor sentiment,” said Christine Cullen, Managing Director of Vision-net.
“The incidence of business failure and creditor debt remains high and, although Irish people are anxious to start their own businesses, it is likely that many of them are doing so because they have no other way to generate income when the jobs market remains flat,” she added.
Some 1,248 registered consumer and commercial judgments worth €76.2 million were awarded in the courts during the first quarter of 2012, with 766 consumer judgement accounting for €62.8 million.
The Revenue Commissioners secured 275 judgements against consumers totalling more than €11.6 million and 95 judgements against commercial organisations amounting to over €3.1 million, according to Vision-net.
Meanwhile, credit unions accounted for 121 consumer judgements awarded by the courts valued at more than €2.5 million, and banks recorded 67 consumer judgements and a total pay-out of over €25.6 million.
Twenty-six per cent of start-ups in the first quarter of 2012 were in the professional services sector, while the wholesale and retail sector accounted for 12 per cent and social and personal services sector accounted for 11 per cent of start-ups.
Hospitality remains the most vulnerable sector of the economy, with 61 per cent of companies deemed to be “in serious danger of collapsing”, according to Vision-net. Similarly, just over half of construction companies are also in danger of collapse.
The prospect of survival for Irish firms involved in the information technology, motor, real estate, and wholesale and retail sectors is around 47 per cent, according to the data.
The number of first-time company directors dropped 34 per cent on the figure for the same period last year to 4,928. The report notes that the average age of a first-time director is 41, and that 62 per cent of them are men.
Cullen said research had consistently shown that the biggest cause of business failure is poor cash flow, stating: “Businesses are not running out of customers – but rather out of money”.
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