Irish insolvencies have hit their ‘highest level since 2018’, report reveals

Their research found there have been 412 insolvencies since January – up 25pc on the same period in 2023. Of those, 77 were in the hospitality sector, which was an 88pc year-on-year increase.

‘The drop in Scarp appointments compared to last year is very concerning’

Deloitte calculates that Ireland is on course for over 800 insolvencies in the full year, which would be 25pc up on 2023. Almost all the firms going bust are small- and medium-sized enterprises.

The Government has been downplaying fears about a record number of companies going to the wall in the aftermath of Covid, when many were kept afloat by State handouts.

Last month a senior official at the Department of Enterprise said it does not believe there is any clear evidence that Ireland is facing into a “tsunami” of insolvencies.

Fiona O’Dea told the Oireachtas Committee on Enterprise that while there had been an increase in the numbers, they remain at “historically low levels”.

James Anderson, a turnaround and restructuring partner at Deloitte, said the country was on course for the highest number of insolvencies since 2017, when the figure was 874.

He also said the number of firms entering the Small Company Administrative Rescue Process (Scarp) is low, down to 13 so far in 2024, compared to 17 in the same period last year.

“The drop in Scarp appointments compared to last year is very concerning,” Mr Andersen said.

“This scheme continues to attract low numbers of companies, despite the positive impact it has had on those which have used it.

“We know Scarp can be successful in saving jobs and we would urge the Government to further invest in raising awareness of this process and its benefits.”

The relatively high level of insolvencies in the hospitality sector is being blamed on higher labour and energy costs, as well as the increase in Vat.

‘Lenders remain very patient, only resorting to enforcement in a very limited number of cases’

Mr Anderson said: “We’re nearly one year on since the Vat rate of 13.5pc was reintroduced for the retail and hospitality sector, and we’re seeing the remarkable impact that costs such as these are having on the businesses involved.”

A separate analysis by PwC has found that insolvencies were 25pc higher in the first half of this year, recording 416 compared to 331 in the same period last year.

PwC estimates that if the rate of increase continues, the total number of insolvencies this year will exceed the pre-pandemic levels of 850 in 2019, and will approach 1,000.

“Annual insolvency rate still remains steady, doubling in recent years but far behind the peak of 2012,” PwC says.

“The current annual insolvency rate is 29 per 10,000 businesses and has remained steady during 2024.

“It has doubled since 2021 when the rate was 14 per 10,000 businesses, although it still remains far below the previous peak of 109 back in 2012.”

According to PwC’s insolvency barometer, there were 21 receiverships in the second quarter, only a slight increase on the same period last year.

“Lenders remain very patient and are only resorting to enforcement in a very limited number of cases,” PwC says.