Skip to main content

4,500 companies saved from going bust during pandemic

By February 8, 2022No Comments

Government pandemic supports saved at least 4,500 Irish companies from going bust – an average of 50 companies every week, according to analysis by PwC which feature in a report ‘Act Now: From recovery to growth’.

The author of the report said that while the businesses avoided insolvency, they will need further support to repair their balance sheet.

Ken Tyrrell, Business Recovery Partner, PwC Ireland, said, “Based on the relatively low rates of business failures in the retail and hospitality sectors during the pandemic, it is clear that that many of the 4,500 companies are in these sectors.

“While they have not gone bust, many are on life support and will need additional support to repair their balance sheets as the service economy fully reopens.”

Overall, the insolvency rate (liquidations & receiverships) per 10,000 companies was 14 in 2021, which was down 87% from its peak in 2012.

When looking at counties, Kilkenny and Dublin saw the highest rate of business failures in 2021

“Kilkenny had the highest number of insolvencies, with 25 business failures per 10,000 companies – higher than Dublin at 24,” Mr Tyrell said. “Cork performed well averaging only 12 insolvencies per 10,000 companies, half of Dublin’s rate.”

The Arts & Entertainment sector was the worst sector impacted by far – with 85 insolvencies per 10,000 companies in 2021, followed by Travel & Transport (47) and Health (36).

The research shows that Retail (8), Hospitality (16) and Construction (15) had a much lower than expected level of insolvencies per 10,000 companies, which may be indicative of government supports targeting these job intensive service sectors.

At the other end of the spectrum, due to the strong performance of the FDI sector and the ability of these workers to easily transition to working from home during the pandemic, PwC’s analysis shows that the lowest rates of insolvencies per 10,000 during 2021 were in the Information & Communications, Professional, Scientific & Technical sectors.

Ireland performs well, with significantly less business failures for every 10,000 businesses compared to the UK.

Overall, Ireland’s insolvency rate for 2021 was 11 liquidations per 10,000 companies. In the UK, the comparable rate is 26 liquidations per 10,000 companies, nearly double Ireland’s rate. PwC’s analysis revealed that over the past 17 years, the UK has historically tended to be 35% higher than Ireland in terms of insolvencies per 10,000 companies.

PwC estimates that there is currently a debt overhang of at least €10 billion made up of warehoused Revenue debt, loans in forbearance, supplier debt, landlords, rates and general utilities.

“This is likely to mean that further support will be required for certain sectors and many of the 4,500 companies identified earlier – which have effectively been on life support – will recover while the economy fully reopens but some will need to proactively repair their balance sheets.

“Many of these companies will need to restructure their debts and will likely look to formal processes such as the Government’s recently launched SME restructuring SCARP (Small Company Administrative Rescue Process) process and traditional processes such as examinership. We expect to see a step-up in restructuring throughout the course of 2022.”

Article Source – 4,500 companies saved from going bust during pandemic – RTE

Copyright and Related Rights Act, 2000

This will close in 0 seconds