Insolvencies steady but companies face 'significant headwinds' for rest of the year
According to Deloitte, so far this year there have been 407 insolvencies — down by 1% compared to the same period in 2024 — with the majority of these being seen in the services and hospitality sectors.
There have been 173 insolvencies in the broad services sector, while there have been 66 in the hospitality sector.
While the hospitality sector saw a 14% drop in insolvencies year-on-year, Deloitte said the sector continued to face a high level of insolvencies.
The firm said hospitality had the highest number of insolvencies of any industry in this country when services are split into subsectors.
'Restaurants are disproportionately impacted within this sector, due to legacy debt issues, difficulty attracting and retaining staff, and energy in Ireland being the most expensive in Europe,' Deloitte said.
Deloitte Ireland turnaround and restructuring partner James Anderson said while insolvency rates were 'broadly in line with 2024', given the 'ongoing geopolitical and trade tension, there are significant headwinds to consider for the rest of the year'.
According to Mr Anderson, company-led closures are down so far this year, while company-led restructuring has increased.
There were 14 Small Company Administrative Rescue Processes (Scarp) during the first half of this year — up from seven during the same period in 2024.
The Scarp scheme was introduced in late 2021 to help small and micro firms which are still viable, yet insolvent, restructure their debts and avoid liquidation. However, uptake of the scheme remains low.
'Scarp has proven to be a successful process that saves companies and jobs. It is disappointing that awareness remains low despite a success rate of over 70%. It is crucial that an awareness campaign is invested in, so more people are aware of it,' Mr Anderson said.
There have been 99 Scarp appointments since its introduction, which represents just 4% of all insolvencies in that time period.
However, creditor-led enforcement activity has increased significantly across both court-appointed liquidations and corporate receiverships.
'Court-appointed liquidation activity arising from unresolved debts are up by 121%, with Revenue petitioning in 64% of these appointments,' he said.
Deloitte said the rise in court liquidations could be attributed to companies being unable to meet phased payment agreements with Revenue as part of the covid debt warehousing programme.
'Corporate receiverships have increased by 37%, with significant activity by alternative lenders enforcing on real estate-backed loans which have defaulted or matured without resolution.'
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