Over 1,000 insolvent liquidations forecast
By SAMANTHA MCCAUGHREN, BUSINESS EDITOR
There are likely to be more than 1,000 liquidations of insolvent companies this year, compared with 426 in 2019, according to insolvency experts.
As a result of Covid-19, there are hundreds and possibly even thousands of ‘zombie’ or insolvent companies still in operation, according to Declan de Lacy of PKF O’Connor, Leddy & Holmes.
Liquidations have ground to a halt over the course of the pandemic restrictions, but they will accelerate significantly in the coming months.
“Smaller companies, some big companies as well, maybe aren’t winding up. They are sitting on their hands maybe waiting for some type of intervention from the State or just ignoring the facts around them,” he said.
“I would be astonished if there isn’t over 1,000 liquidations between now and the end of the year. Given the scale of the difficulties that SMEs are facing, it’s difficult to see how there wouldn’t be that sort of number.”
Figures compiled by PKF said that liquidation of insolvent companies peaked in 2011 at 1,410 during the financial crisis. But they had fallen steadily since then.
De Lacy said that retail, hospitality, and professional service companies were among the sectors which were likely to run into difficulty.
Professional services would include “legal firms, accountants, engineers, architects [and] anybody whose clients are going to be facing into difficulties.”
He added: “When we talk about zombie companies, we are talking about an unliquidated, insolvent company that is incurring losses funded by the State and its suppliers. It is damaging its competitors by not paying its taxes and suppliers when they are.
“I would say there are thousands and many of them won’t get liquidated for a long time or they might just get struck off, close their doors and forget about their obligations.”
Each year there are also between 1,000 and 1,500 solvent liquidations of companies, many of which are IFSC-linked vehicles.
Sunday Independent Business