According to the latest set of corporate insolvency statistics published by www.insolvencyjournal.ie, business failures are down 20 per cent for the first six months of the year compared with the same period last year.  However, the retail, hospitality and motor sectors continue to suffer.

There are 706 business failures year to date compared with 887 for the first half of 2012. Business failures in June this year totaled 95, an 33 per cent drop compared to 145 insolvencies recorded in June 2012. Total insolvencies for Q2 (April, May June) 2013 stand at 359 compared to 454 for the same period last year, a 21 per cent drop.

Motor Industry continues to suffer

Unfortunately, the motor industry saw a massive 130 per cent increase in the level of business failures from 10 recorded from January to June 2012 to 23 January to June 2013. According to figures released by The European Automobile Manufacturers’ Association ACEA new car registrations in May dropped 5.9 per cent from oneyear ago, which they reported were the lowest level recorded for a month of May since 1993. In Ireland the Society of the Irish Motor Industry (SIMI) are hoping the new summer registration-taking affect in July will boost sales midway through the year.

Business failures in the construction sector have dropped by 22 per cent, with 217 recorded from January to June 2012 compared with 169 January to June 2013.  The services sector (which would have a certain link to construction sector as it includes architects, QS, property managers etc…) has also seen a decrease in corporate insolvencies, falling 53 per cent from 215 January to June 2012 to 101 January to June 2013.  However the drop in corporate insolvencies in the construction sector does not necessarily mean a return to growth as according to the Ulster Bank Construction Purchasing Managers’ Index (PMI)the sector is still suffering from lack of confidence as new orders continue to fall.

Both retail and hospitality sectors saw an increase in corporate insolvencies for the first six months of 2013 compared with the first six months of 2012. Hospitality increased 16 per cent year on year from 77 to 89 while retail jumped 6 per cent from 109 to 115. The Retail sector did however have some positive news during June with HMV, who entered receivership in January this year, announcing that the purchaser Hilco would reopen at least four HMV stores in Ireland employing a total of 100 staff.  Further positive news for the retail sector was the announcement that Hilco purchased movie chain Xtra Vision out of receivership with the company reported to be entering into discussions about renegotiating leases for the stores with landlords.

Commenting on the outlook for the second half of 2013, Ken Fennell, Partner with kavanaghfennell (the firm that compile the data) said  “We anticipate the reduction in corporate insolvencies to continue into the second half of 2013, however we expect this reduction to remain at the current pace. While the overall reduction in corporate insolvencies is welcome, however, with the introduction of the new personal insolvency legislation this good news could be somewhat off set by a rise of personal bankruptcies. The continuing slide in the retail and hospitality sectors indicates an on going lack of consumer confidence.  We envisage examinership activity to increase with the new legislation and we will be watching with interest the commencement of personal insolvency applications”.

Regarding the personal insolvency legislation the Government has now nominated six county registrars for appointment as specialist judges of the Circuit Court, this new role was created under the Personal Insolvency Act to allow the Circuit Court deal quickly with personal insolvency applications. Personal Insolvency Practitioner (PIP) courses have been running over the course of the last months and examinations are taking place as all PIP’s need to be approved by the Insolvency Service of Ireland.