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Business failures up 54% in the first half of 2023

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The first half of the year has seen a significant increase in business failures in Ireland, with insolvency levels up by 54% compared to 2022, according to PwC’s Insolvency Barometer.

In the first six months of this year, 321 businesses failed, compared to 209 in the same period last year. The second quarter saw a 55% rise in insolvencies compared to Q2 2022.

Over the past 12 months, the rate of business failures has reached 25 companies per 10,000, a notable increase from the historic low of 14 per 10,000 at the end of 2021. However, overall business failure rates in Ireland still remain relatively low. Prior to the pandemic, the insolvency level stood at 36 per 10,000 in 2019.

PwC predicts that business failure rates are likely to further increase in the coming year, particularly as the Revenue’s Debt Warehousing Scheme unwinds. The report highlights that more than 6,000 companies that participated in the scheme still owe €1.9 billion and will need to establish phased payment agreements with the Revenue by May 2024. Recently, the Revenue announced that 510 eligible companies under the tax debt warehousing scheme have been liquidated in recent years, leaving over €55 million of tax debt outstanding (with €50 million of this being warehoused).

PwC anticipates that the number of liquidations will rise as the May 2024 deadline approaches. The total warehoused debt represents around 2.5% of the projected total exchequer receipts for 2023. Additionally, 57,000 companies owe a combined total of €0.3 billion, with an average debt of €5,000.

According to PwC, the arts, entertainment, and recreation sector experienced a failure rate nearly three times the national average over the past year, with an annual failure rate of 63 per 10,000 businesses. The health and hospitality sectors followed closely behind, with annual failure rates of 48 and 41 per 10,000 businesses, respectively.

Ken Tyrrell, Business Recovery Partner at PwC Ireland, attributed the increase in business failures mainly to cost inflation, rising interest rates, and legacy debt accumulation. He noted that lender enforcement remains low, and with many companies participating in the Revenue’s Debt Warehousing Scheme, it is expected that businesses will turn to formal restructuring processes such as examinership and SCARP (Scheme of Arrangement for Creditors and Partnerships) to address legacy debts.

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Lisa
Lisa
Lisa is a skilled writer with a huge passion for journalism. With a talent for storytelling and a deep understanding of current events, she has quickly become a respected journalist in the industry. Lisa's articles are always well-written and thought-provoking, and she has a knack for finding the most interesting angles on any story. She is known for her ability to connect with her readers and engage them in the issues that matter most. Lisa is a dedicated journalist who is passionate about making a positive impact through her writing. When she's not working, Lisa enjoys hiking, yoga, and spending time with her loved ones.

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