Year on year decline in company failures but retail takes a battering
February 01, 2013
According to latest insolvency statistics published by www.insolvencyJournal.ie, the number of business failures in January 2013 totaled 107. This figure is a 22% decline on the total of 137 business failures recorded in January 2012.
There has been a 14% drop in the total number of corporate insolvencies for November 2012, December 2012 and January 2013 compared to the same period the previous year i.e. November 2011 to January 2012. These figures may be early indicators of some economic stabilisation, however, the high level of retail insolvencies in January does raise concern for the sector. Despite strong trading in December, troubled retailers were mopping up what they could prior to year-end, in advance of what were likely to be pre-planned closures. Latest figures from the CSO reveal the volume of retail sales fell by 0.1% in December compared with the previous month. These figures also indicated sales fell by 1% on an annual basis in December which is the largest decline in five months. Total retail sales have now fallen by 25% since the start of the recession.
During the second week in January news broke that administrators had been appointed to music, film and games retailer, HMV in the UK and later in the week it was confirmed that a receiver had been appointed to the Irish operation. In Ireland HMV employed approximately 300 staff in 16 stores. It was also announced that DVD and games rental store Blockbusters in the UK had also entered administration the same week. Blockbusters employ over 4,000 staff across 528 stores in the UK.
Also in January, Irish fashion retailer Pamela Scott applied for court protection under the company name Arzac Developments Limited which is the company running 12 of its 24 stores, with the examinership appointment being confirmed on Friday 25th January. The shops include Grafton Street, Dublin, as well as stores in Cork, Limerick, Tralee, Carlow, Drogheda, Arklow and Sligo. The company said it would use the examinership process to restructure its debts, secure fresh investment and renegotiate rents with landlords.
We would expect to see an increase in examinerships this year with the expected change in Company Law making it easier for SME’s to apply directly to the Circuit Court for protection. Under the new legislation, companies satisfying two of the following three conditions - fewer than 50 employees, turnover less than €8.8m and a balance sheet value not exceeding €4.4m - will be able to apply to the Circuit Court to enter examinership.
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