The insolvency rate remains below the 20-year running average, with considerably less insolvencies last year than was expected.
While there were 852 insolvencies in 2024 - an increase of 16% - this was below the expected number of 900.
On Newstalk Breakfast, spokesperson for professional services firm PwC Ken Tyrrell said that while the overall number of insolvencies is up, certain quarters were lower than the previous year.
“Versus 2023, it was up 16% - but what was interesting was at the end of Q3, that had been up 34% on the year before,” he said.
“Q4 figures are actually a bit lower – they're 20% lower than 2023, which is the first time that’s happened in a couple of years.”
Branch of HMV closing down sale, Islington, London. Jeffrey Blackler / Alamy. 2014Mr Tyrrell said this could be a sign that average long-term insolvency rates are dropping.
“If we look back over 20 years, the average insolvencies per 10,000 companies is 50 – at the moment, we’re 29 per 10,000,” he said.
“In real terms there were 852 insolvencies last year, if we’re at the long-term average, that’ll be closer to 1,500.”
Liquidations
According to Mr Tyrrell, the number of liquidations and small company rescues are also down last year.
“Last year, there was 30 Small Companies Administrative Rescue Process’s (SCARP’s) initiated during 2024 - that was three lower than the year prior,” he said.
“There’s roughly 25 liquidations for every SCARP at the moment.
"So, the general preference is for companies that are facing insolvency to go for liquidation, primarily down to profitability.”
Mr Tyrrell said the low number of companies that availed of SCARP was ‘quite disappointing’.
“It would have been expected to be a lot higher,” he said.
“If there is any sort of change in the economy, maybe it will become a more viable option.”
According to Mr Tyrrell, recent PwC research shows that the average age of companies that filed for insolvency last year was 13 years old.
Featured image: Closing down sign in a boarded-up shop window. Image: WD Stockphotos / Alamy. 21 October 2020
