Economic recap
May 2023 saw the Reserve Bank lifting the OCR by a final 25 basis points and stepping back saying job done in the belief they have broken the back of inflation with no further raises needed at this time, they do not anticipate any drops till 2024 however when inflation has dropped back somewhat.
Of note from the below graphs, you will see the raised levels of appointments compared to the prior two years and heightened winding up application levels that highlight the challenging economic climate and financial difficulties experienced by companies, necessitating closer attention to their financial stability and operational viability. This will likely continue for some time.
Company Insolvencies – Liquidations, Receiverships, and Voluntary Administrations
Company insolvency appointments for May 2023 have dropped back to the 2020/2021 levels. The drop largely coming from shareholder insolvent appointments while court liquidations levels only dropped a little.
Whether this level of court appointments will continue as the election approaches is yet to me seen with IRD action continuing at its newly elevated levels.
Total corporate insolvency figures for the year to date remain above the last 3 years but with the slower Jan and Feb 2023 and a reduced May 2023 we remain behind the 2019 total levels, This gap has widened following the April highs we were unable to maintain.
Solvent liquidations have increased on the April stats but remain below the highs seen every March. For the month however the level remains below the average of 17% of total appointments. Insolvent liquidations remain consistent and sit around their average along with Voluntary Administrations, Receiverships, and other appointments. The outlier that peaked above their average was court liquidations making up 31% where the average is normally 23% of total appointments.
Winding Up Applications
In May we have a significant increase in winding up applications compared to previous Mays. In May-21, there were 53 applications, consisting of 12 company winding up applications and 41 IRD winding up applications. In May-22, the numbers further increased to 54 applications, with 30 company winding up applications and 24 IRD winding up applications. However, in May-23, there was a notable surge in winding up applications, reaching 84 in total. Out of these, 37 were company winding up applications, and 47 were IRD winding up applications.
These figures clearly show an upward trend in winding up applications for the month. Comparing May-23 to May-22, we see a substantial increase of 56% in the total number of applications. The number of company winding up applications also rose by 23%, while IRD winding up applications witnessed a staggering increase of 96% reinforcing the narrative we have been hearing of IRD ramping up pressure on derelict debtors.
Looking at the year-to-date figures, the upwards trend becomes even more apparent. In the first five months of 2023, the total number of winding up applications has been consistently higher compared to the same period in both 2022 and 2021. This suggests an ongoing and intensifying financial strain faced by companies, as evidenced by the increased need for creditors to seek winding up procedures against debtors.
Personal Insolvencies – Bankruptcy, No Asset Procedure and Debt Repayment Orders.
Personal insolvency appointments remain at the low levels seen in the last few years. As a breakdown of appointment types bankruptcies remain above their long term average taking the full buff from No Asset Procedures.
Election Year Insolvencies
The above graph details the total corporate and personal appointments across all appointment types in this year and the last two election years.
While total insolvencies remain above 2020 due to the lockdown in place in 2020 the levels are below 2017. Personal insolvency appointment levels continue to drag down the total as you can see in the below graph they remain below 2017 and 2020 figures.
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