There was a 30% drop in the level of corporate insolvencies in 2021 compared to the previous year, according to a new report by Deloitte.
In total 401 corporate insolvencies were recorded in Ireland last year, down from 575 in 2020.
On a quarterly basis, 123 corporate insolvencies were recorded in the final quarter of the year – the highest quarterly figure of the year.
"Whilst one might have anticipated an upward trend in insolvencies in 2021, given the significant number of businesses that have been directly or indirectly affected by the pandemic, it is evident that the full economic effect of Covid-19 on the Irish economy still has yet to fully materialise in terms of the total number of corporate insolvencies," said David Van Dessel, Partner, Financial Advisory at Deloitte.
Mr Van Dessel said they expect the economic impact of the pandemic will materialize over a number of years, rather than a 'tsunami' of corporate insolvencies in 2022.
"The withdrawal of the Government’s Covid supports will impact struggling companies with varying intensities, depending on their business sector and the level of arrears they are carrying," he said.
The services industry once again recorded the highest number of corporate insolvencies, with 168 in 2021 - 42% of the total insolvencies.
The figures show that this is consistent with 2020, when 39% of all insolvencies recorded were in the services industry and also in 2019, when 37% were in the services industry.
Financial services and real estate companies accounted for the vast majority of insolvencies recorded within the services industry in 2021, with 114 .
Health, fitness and beauty companies also featured prominently again, with 31 insolvencies recorded in 2021, compared with 40 in 2020.
Seven insolvencies were recorded in entertainment, six in agriculture, five in education and five in other services in 2021.
The construction industry recorded the second-highest number of corporate insolvencies last year with 69, representing 17% of total insolvencies.
This is a marginal increase from 2020, when 65 construction insolvencies were recorded.
The report notes that current construction insolvencies are lower than pre-pandemic levels.
There were 94 insolvencies recorded in the construction industry in 2019 - despite the impact of cost inflation that was widely reported during 2021.
The hospitality industry recorded a low level of insolvencies in 2021 with just 31, representing 8% of the total number.
This is a 65% decrease from 2020, when 88 corporate insolvencies were recorded in the hospitality sector and a 62% decrease from 2019, when 82 hospitality insolvencies were recorded.
The retail industry recorded 38 insolvencies in 2021, representing 9% of total insolvencies.
This is a notable decrease of 62% when compared with 2020, when a total of 101 retail insolvencies were recorded.
Similarly, when compared to 2019, retail insolvencies are down 56% from 87.
Mr Van Dessel said you would expect the hospitality and retail sectors to be particularly affected by the pandemic.
However, when compared with both 2019 and 2020, 2021 has seen a notable decrease in insolvencies across both sectors.
"This strongly suggests that a number of companies in these sectors are relying on government Covid supports and/or creditor forbearance and, as a result, are delaying taking action to address a likely insolvency scenario," he said.
"Therefore, it seems likely that we will see an increase in the number of hospitality and retail insolvencies, either in 2022 or beyond," he added.
The manufacturing industry recorded 28 insolvencies in 2021, remaining consistent with 2020 and 2019.
The transport industry recorded 42 insolvencies in 2021 - however, the report states that this figure is somewhat distorted, as 27 of these insolvencies related to a single group of companies.
"It would appear that the effect of rising fuel prices has not, as yet, impacted transport sector insolvencies," Mr Van Dessel said.
The IT industry recorded seven insolvencies in 2021 and continues to be the industry least-affected by the pandemic.
