The number of corporate insolvencies recorded in the first six months of the year was down 38% compared to the first half of 2020, according to new figures from Deloitte.
169 corporate insolvencies were recorded between January and June, compared to 273 during the same period last year.
In the second quarter of this year, 58 corporate insolvencies were recorded, a decrease of 48% compared to the first quarter of 2021 when there were 111 incidents.
According to Deloitte, the continued low level of corporate insolvency activity is largely due to the Government supports introduced to support businesses during the pandemic.
However, David Van Dessel, Partner of Financial Advisory at Deloitte said the full effects of Covid-19 on the Irish economy have not fully materialised in terms of corporate insolvencies.
"We anticipate that the first half of 2022 will paint a more accurate picture of how the Covid-19 pandemic has influenced the economy and the knock-on effect on our SME sector," he said.
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Worst hit sectors
The data from Deloitte shows that the services sector recorded the highest number of corporate insolvencies in the first half of the year, at 73.
That represents 43% of total insolvencies recorded during the period.
This is down 23% when compared to the first half of last year, when the services sector experienced 95 insolvencies.
Within the services sector, financial services experienced 51 insolvencies, representing 70% of all insolvencies recorded in the services sector in the first half of the year.
Outside of the services sector, the construction sector recorded 31 insolvencies during the first half of the year, representing 18% of total insolvencies recorded during the period.
This is an increase of 15% when compared to the first half of last year, when a total of 27 insolvencies were recorded in the construction sector.
The retail sector recorded just 20 insolvencies, representing 12% of all insolvencies recorded during the first six months of the year.
This is a decrease of 61% when compared to the first half of 2020, when 51 insolvency incidents were registered in the sector.
The hospitality sector recorded 17 insolvencies in the first half of the year, representing 10% of overall insolvencies during the period.
This is a sharp decline of 65% compared to the first half of last year, when 48 insolvencies were recorded in the sector.
Of the 17 hospitality sector insolvencies reported so far in 2021, ten related to hotels and inns, compared to 16 in the first half of last year, five related to companies operating in the food services sector – such as restaurants and catering companies, compared to 29 in the first half of last year, and only two insolvencies were recorded for companies operating as bars or pubs, compared to three in the same period last year.
The manufacturing sector recorded 12 insolvencies in the first half of the year, representing 7% of total insolvencies.
The transport sector recorded eight insolvencies, 5% of the total, and the wholesale sector recorded five, 3% of total.
The level of insolvencies recorded in these sectors in the first half of the year had all decreased compared to the first half of 2020.
Age profile of companies
The data shows that only 14% of the insolvencies recorded during the first half of the year relate to companies less than five years old.
16% are in the 5-10 years bracket, 31% are in the 10-20 years bracket, 21% are in the 20-30 years bracket, 8% are in the 30-40 years bracket and 10% are over 40 years old.
Mr Van Dessel said the age profile analysis reflects a similar position to that of previous years.
"It suggests that the level of insolvency for start-ups – that is, businesses in the zero-to-five-years bracket – is lower than one might expect, given the inherent fragile nature of start-ups," he said.
"In addition, the numbers point to a relatively even spread of insolvency activity throughout the different age profiles and a reduction in insolvency activity can be seen in the over 20 years bracket," he added.
Geographically, the data shows that the highest number of corporate insolvencies in the first half of 2021 was recorded in Leinster, with 59% of total insolvencies.
26% of total insolvencies were recorded in Munster, 9% in Connaught and 6% in Ulster.
Compared to the first half of last year, the number of insolvencies have dropped in Leinster and Munster, while they have increased in Connacht and Ulster.