10 Jan 2018 | 09.30 am
Spike In Revenue Liquidations
Examinerships doubled in 2017 saving 957 jobs
10 Jan 2018 | 09.30 am
The number of court liquidator appointments rose to 63 through 2017, up 18 from 2016, and in the majority of these cases the Revenue Commissioners took the petition to wind up.
According to data from Deloitte, total corporate insolvencies in 2017 amounted to 874 last year, a 15% decline from the total in 2016.
Voluntary liquidations accounted for 535 insolvencies (61%), compared with 626 in 2016. This was followed by 247 receiverships, (28%), down from 346. Deloitte counted 29 examinership appointments, up from 15 in 2016.
Deloitte restructuring partner David Van Dessel (pictured) commented: “Of particular interest is the doubling of examinerships. It seems that the message that this restructuring route is offering companies a real chance at survival is getting through and I hope to see this figure increase again during 2018. Half of companies who choose this route survive and that has to be a motivator for any company director.”
In 2017, of the 29 examinership appointments in total, 21 have exited the process at the end of the year with 11 of the companies involved successfully returning to trading and 10 going into liquidation. Eight remain in examinership. “This success rate is lower in comparison with 2016 when more than 70% of companies returned successfully to trading but still demonstrates that many struggling companies can return to an even keel if they attempt an examinership,” Van Dessel observed.
Baker Tilly Hughes Blake calculates that 957 jobs were saved through examinership in 2017, an increase of 166% of the 2016 figure. The accountancy firm estimates that due to the examinership corporate rescue mechanism and preserving employment that was previously under threat, the state was saved over €3.8m in respect of potential claims for arrears of wages, holiday pay, minimum notice and redundancy.
Notable examinerships in 2017 included The G, The Eye Cinema, The Meyrick, Golden Pages and The Regency (since rebranded as The Bonnington Hotel Dublin).
Dessie Morrow, Director of Corporate Recovery in Baker Tilly Hughes Blake, commented that the increase in jobs saved in the SME sector signifies the difficulties still facing many companies arising principally from legacy debt issues.
“Many companies who consider examinership face significant barriers in accessing working capital which can lead to disgruntled creditors and an inability to pay short term debts as they fall due. This is in part exacerbated by the general improvement in the economy, increasing demand for goods or services and thereby stretching working capital requirements,” he said.
Morrow advised companies that find themselves in a situation where they are struggling to pay debts to seek advice before the problem develops further. “Companies finding themselves in such a situation should first seek professional advice as to whether the breathing space afforded by the examinership process would allow time to restructure their debts and return the company to a firmer financial footing. This would typically be in the form of an independent review from an accountant specialising in that area,” said Morrow.
“We believe there will be an upturn in companies entering the examinership process in 2018. An appetite exists from lenders and investors to provide funding to firms that have restructured and are taking a responsible approach to getting their companies back to a stable position.”
The services sector recorded the most insolvencies in 2017 with 391 appointments, 45% of the total. This was a big increase on 2016 when 329 appointments were recorded. In the retail sector there were 103 insolvencies, up from 96 in the prior period.