Insolvency Drops in Northern Ireland

By January 5, 2017Articles
Insolvency has been an issue for many with the recent economic depression. 2015 figures released by the government have shown a decrease in Irish insolvency. But is this a true reflection of the state of the country?

One-Third of Applications End in Bankruptcy

Insolvency is the base term for the application of receivership for both businesses and individuals. Bankruptcy refers to an individual, while administration or liquidation refers to companies. In the third quarter of 2015 almost 34 percent of listed individual applications ended in bankruptcy. That equates to around 7 insolvencies per day for the period from July to September of 2015. This shows a decrease in the actual number of bankruptcy cases following the recession. However, it also shows that the recovery of the Irish economy is struggling and slow, as the decreased figures are not as high as economists expected.

Government Figures

From the period of July to September 2015 the Insolvency Service states there were 611 individual insolvencies. This is down 37.3 on the third quarter of the previous year. And of that number, only 199 ended with bankruptcy, showing a cumulative fall of 34.3% over the last three years.

Individual Voluntary Arrangements (IVAs) counted for 301 of the 611 insolvencies, down 45.2% on 2014, with Debt Relief Orders (DROs) dropping 9.8% to 111 on the same period.

With 86 company insolvency for the same period, of which 55 were compulsory liquidations, it means that there was one company per day winding up its business.

Figures Do Not Show Reality

John Gordon, of Irish insolvency firm Napier and Sons stated that although the number of bankruptcies is going down it may not be a true account of the reality. Mr Gordon also stated that court lists have been limited to a maximum number of cases per day, due to the volume of cases being filed.

Napier and Sons, who handle more cases of insolvency than any other company in Northern Ireland, are still handling a lot of cases on a daily basis, according to Mr Gordon. The recession has hit small and large businesses alike. B&Q Ireland Ltd, the nationwide DIY chain, was placed into liquidation by the High Court. Michelin and Gallagher’s have also been listed for investigation.  And dabblers in the property market have ended up in bankruptcy after getting burned by the housing market crisis.

2016: A Better Year

According to the Office for National Statistics, the third quarter of 2016 has shown an improvement in the trend of insolvencies. With only 69 company insolvencies in that quarter, 46 being liquidations, it is down 23.3% on 2015.

And individual insolvency was also down at 547, 10.5% lower than the third quarter of 2015. Of that, 203 were bankruptcies, which is a slight increase. However, both IVAs and DROs showed a drop on the same quarter.

Changes in the Statutory Rules from the Northern Ireland Assembly came into effect from midnight 29 November 2016. This will have a profound effect on the bankruptcy statistics for 2017, with increases in the limits for eligibility for DROs, and an increase of the amount of debt for which a creditor can force insolvency from £750 to £5,000.

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