As the country slips into recession, business failures are mounting.

Buoyed by surging economic growth and supportive banks, the number of Irish business failures has consistently fallen over the past five years. Various sectors have suffered at different times, but the overall economic and business climate has remained strong - until now.

The most recent figures paint a far more depressing picture, with a 76 per cent increase in the number of companies that collapsed in the first half of this year, as the economy slips into recession and Irish companies feel the pinch.

The corporate recovery and insolvency department of accountancy firm Farrell Grant Sparks (FGS)maintains a running total on the number of Irish companies going out of business. FGS said that 312 companies collapsed in Ireland in the first six months of the year, up from 177 for the same period last year.

If the trend continues, the annual total could top the 600 mark for the first time in living memory.

The FGS figures cover all companies that have gone into liquidation, examinership or receivership, and offer the first significant snapshot of how Irish businesses are performing this year.

The figures also show the increased readiness of the banks to call in loans and seize assets. In the first half of 2008, Irish financial institutions appointed receivers over the assets of 23 companies, up from just five in the same period in 2007.

In the past, most banks would prefer an informal scheme of arrangement, rather than put in a receiver. In recent days, however, Bank of Ireland installed a receiver for the first time in almost a decade.

Many of the receiverships have been in the property sector, with banks moving to secure loans advanced for large-scale property deals.

Given the current housing climate, it is not surprising that the largest number of corporate failures were in the construction and engineering sector, with some 130 companies going out of business. This sector accounts for 42 per cent of all failures in Ireland this year, according to the FGS data.

All over the country, construction companies and subcontractors are appointing liquidators on an almost daily basis. More construction firms have gone under in the last six months than in the whole of last year.

But it’s not just construction suffering. The FGS figures show that there has been an increase in the number of failures across all areas of the economy, with the hospitality sector hit particularly hard. A total of 42 bars, restaurants and hotels went bust in the first half of the year, compared with 22 for the same period last year.

In recent weeks, for example, a examiner was appointed to Dunne Group Hotels, one of the country’s largest hotel chains, while Bank of Ireland appointed a receiver to Redcorn Development, the company that developed the Watermarque Boutique Hotel and Spa in Caherciveen, Co Kerry.

The Irish technology sector, which has rallied in recent years, recorded its highest number of failures since the dotcom crash. Fourteen technology companies went out of business during the first half, up from six and nine during the previous two years.

An analysis of the FGS data reveals increases in business failures in the security sector, healthcare and leisure, and the motor industry.

Companies operating in the interior design and home furnishings sector have also noted a surge in liquidations and examinerships. The retail sector was an exception to the trend, with a drop in the number of company failures to 26, from 32 the previous year.

Almost half of the companies that went bust were based in Dublin, while Cork, Wicklow and Galway also registered high numbers of insolvencies. Roscommon was the only county in Ireland not to record a corporate casualty in the first half of the year.

A number of the companies to go bust this year have been high profile and have left behind large debts. Iqon Technologies, the award-winning Co Louth computer manufacturer, left debts of more than €11.8 million after going into liquidation; while AgCert, the Dublin carbon credits firm, sought bankruptcy protection after amassing a financial deficit of €90 million.

With the economy predicted to go into recession in the latter half of this year, experts are predicting that the trends will continue throughout 2008.


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