A new survey reveals significantly lower insolvencies than expected in the last quarter of 2024 and for the entire year.
PwC’s latest Insolvency Barometer shows there were 852 insolvencies in 2024, an increase of 16% on the 734 insolvencies in 2023.
But the final figure for the year is significantly lower than the more than 900 insolvencies expected for 2024.
PwC noted that the overall insolvency rate per 10,000 businesses has doubled since 2021 but remains below the 20 year average.
The latest barometer shows that the annual insolvency rate in 2024 was 29 per 10,000 businesses.
Although the current rate is more than double the annual rate of 14 per 10,000 recorded in 2021, it still remains below the 20 year average of 50 per 10,000 businesses, and far below the previous peak of 109 per 10,000 businesses recorded in 2012.
PwC noted that the retail sector saw the highest number of insolvencies of any sector in 2024, accounting for 200 of the 852 insolvencies or 24%, equating to a rate of 32 per 10,000 businesses.
Hospitality insolvency numbers remain steady, but the sector is still one of the most challenged industries, it added.
Hospitality recorded 150 insolvencies for the year or 18% of total 2024 insolvencies, representing 77 per 10,000 businesses, one of the highest of any sector.
Today’s barometer shows that the average lifespan of the 852 companies declaring insolvency in 2024 was 13 years, with the shortest being 10 months and longest being almost 60 years.
It also shows that the number of SCARPs initiated in 2024 was just 30, down from 33 in 2023. Only one in every 20 insolvent companies are opting for a rescue process such as SCARP or examinership.
PwC said the underutilisation of this relatively new rescue process suggests that most insolvent companies have fundamental profitability issues and are opting for liquidation rather than a rescue process.
Meanwhile, receivership appointments in 2024 fell by 13% compared to 2023, with 98 recorded in 2024. Lenders are continuing to show a lot of patience in line with the past few years, PwC noted.
Ken Tyrrell, Business Recovery Partner, PwC Ireland, said the lower than expected insolvencies in the fourth quarter of 2024 may be due to an economy that is performing well, easing inflation, cautious but steady consumer sentiment, a positive sentiment following Budget 2025 and strong fiscal receipts.
“But nothing is certain, as businesses will need to deal with a higher cost base in 2025 alongside Ireland’s economic outlook being partially clouded by potential international macro-economic and geo-political headwinds,” Mr Tyrrell said.
“Businesses need to focus on their core operations, engage with their people, embed AI and GenAI and manage working capital to ensure they are sustainable into the future,” he stated.
He said the Irish economy and many Irish businesses continue to demonstrate resilience.
“Typically at this time of year, there is a natural seasonal increase in insolvency levels during Q1 as business owners assess their trading from the previous year, build forecasts for the year ahead and make fundamental decisions based on their outlook for the coming year,” he added.
Article Source – Lower than expected number of insolvencies in 2024 – PwC – RTE