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File photo of a shop displaying a closing down sales sign. LEFTERIS PITARAKIS/AP/Press Association Images
Insolvencies

August one of highest months for insolvencies

An average of 10 companies a day became insolvent in August, with one-third of insolvent companies leaving unpaid mortgages behind.

THE NUMBER OF insolvencies rose in August – with ten companies every business day in Ireland going bust during the month.

New figures released today by Vision-net.ie show that 205 companies were declared insolvent last month and had either a Liquidator or Receiver appointed – representing a 68 per cent increase on the same month last year. April saw the highest number of insolvencies, at 215.

Of those companies declared insolvent in August, 60 per cent had an “unsatisfied mortgage”, which means that any banks loans taken out by these companies will be only partially repaid – at best.

Insolvencies in August comprised 174 liquidations (85 per cent) and 31 receiverships (15 per cent), however – in comparison with July – August displayed a 22 per cent drop in the level of receiverships.

Construction was the sector most adversely affected by the appointment of a liquidator, with 40 per cent declared insolvent.  Retail (33), real estate (21) and hospitality (17) businesses followed.

In total, there were 1,090 insolvencies recorded for the first eight months of 2001 – representing a seven per cent increase on the same period last year, reports InsolvencyJournal.ie.

Commenting on the figures Ken Fennell of kavanaghfennell, the firm who compiled the data for the InsolvencyJournal.ie,  commented said: “The overall trends in corporate insolvencies for the year to date would suggest that at least 1,600 companies will enter into some form of insolvency arrangement by the end of the year with construction and retail continuing to bear the brunt”.

Meanwhile, Christine Cullen, Managing Director, Vision-net.ie said that the proportionally higher rise in insolvencies in the retail and hospitality sector is likely to be “a reflection of the weak consumer sentiment and the lack of disposable income”. She said that it was important to remember that behind every company collapse are employees whose “incomes disappear overnight”, and warned:

“As the debate on debt forgiveness remains to the fore, today’s figures suggest that the number of people who have limited or reduced income regrettably looks like it is set to rise”.

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