About 20 companies a week could go to the wall this year as higher costs and tight capital hit small businesses in particular, accountants warn.
Company insolvencies reached 875 in 2024, up a third on the previous year and the highest number since 2016, according to a report from accountants Deloitte published on Friday.
The firm predicts that this year’s total will top 1,000, an average of 20 a week.
Hospitality businesses, shops and builders, all of which suffered in 2024, are likely to remain most at risk this year, Deloitte warns.
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James Anderson, the firm’s turnaround and restructuring partner, blamed rising insolvencies on higher costs for small and medium-sized businesses and limited access to working capital.
“Small businesses, in particular, are being affected by these issues,” he noted.
He pointed out that some small business owners were using their own money to meet their companies’ cash needs.
Mr Anderson called for a review of the Small Companies Administrative Rescue Process, a streamlined rescue mechanism for troubled small businesses introduced in 2021.
While Deloitte maintains that the process works well when businesses use it, the accountants’ firm says that few of the companies that found themselves in difficulty in 2024 actually opted for it.
[ Irish corporate insolvencies hit six-year high in 2024, PwC report showsOpens in new window ]
About three of every four companies wound up last year went through creditors’ voluntary liquidations.
This is most commonly used by limited liability firms that cannot pay their debts.
“Given that the issues that were central to the high level of insolvencies in 2024 are likely to persist in 2025, we are forecasting that the number for this year will surpass 1,000,” said Mr Anderson.
“This is based on the average annual increase of insolvencies from 2022 to 2024 being 30 per cent, applying a 15 per cent increase to 2024 figures brings the total to 1,006,” he explained.
Hospitality businesses, mostly pubs and restaurants, accounted for 147 casualties in 2024, up from 99 the previous year and more than twice the 66 failures recorded in 2022.
The industry has been warning the Government that last year’s boost to the minimum wage and the loss of a VAT concession was putting businesses under pressure.
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