New figures from accountants Grant Thornton show that more companies are seeking protection from creditors through examinership, but fewer companies are emerging successfully from the process.
Last year the High Court appointed examiners to 70 companies, over twice as many as the year before.
The research, which covers all of 2007 and 2008, reflects the changes in the economy over the time. Most companies that went into examinership at the beginning of 2007 are still in business, while the success rate of those that entered the process towards the end of last year is just 30%.
Michael McAteer, of Grant Thornton, says the increase in company failures is down to two main reasons - the lack of cash available in the system on both the banking and private equity side and the fact that the wrong type of company is using the examinership process.
In 2007, three of the four companies who availed of the process were involved in the construction sector and exited the process successfully. But in 2008, of the 11 construction firms who went into examinership just two came out the other side.
Mr McAteer says this is a need for a new process to help companies trying to get out of insolvency which would be different than the current models of examinership, receivership and liquidation. He says the examinership process is a very time-consuming and costly process.
In other countries such as the UK, a process exists calls credit voluntary arrangement, which is done outside the court process and therefore is quite a cheap solution.
