There was a reduction in the number of company insolvencies in the first six months of this year, according to new figures from Deloitte.
Today’s figures suggests that the impact of Covid-19 has not fully materialised.
Deloittes said there were 273 company insolvencies between January and the end of June, a reduction of 12% on the same six month period last year.
Although many companies – particularly in the retail and hospitality sectors – were closed for weeks or months, they have been assisted by state supports including the government payment schemes and the freezing of certain fixed costs.
However, that situation is expected to change in the months ahead as businesses reopen and the state gradually withdraws the supports.
David van Dessel, Financial Advisory partner at Deloitte, said insolvencies were expected to increase in the latter part of this year and next year.
He appealed to companies experiencing challenging trading conditions to take early action so they can avail of the greatest range of options, including refinancing and restructuring
“The sustained loss of trade (in recent months) will likely prove very damaging for many businesses and some will not be in a position to continue trading as a going concern,” Mr van Dessel said.
In addition, mandatory social distancing measures as well as changes in consumer behaviour and sentiment will likely bring fresh trading challenges for businesses to overcome,” he said.
“While the current insolvency numbers already indicate that the retail and hospitality sectors are experiencing more insolvencies than in previous periods, these numbers are expected to increase throughout 2020 and into 2021,” he warned.
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