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    The Rise in Corporate Insolvencies - A Return to Normal or Something Deeper?


    Boland, Michael James (2025) The Rise in Corporate Insolvencies - A Return to Normal or Something Deeper? Commercial Law Practitioner, 32 (6). pp. 75-83. ISSN 0791-895X

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    Abstract

    This article considers the recent rise in corporate insolvencies. It shows that there have been increases across most insolvency processes in 2024 compared with previous years particularly in the area of liquidation which saw an increase of 133 on 2023 figures. Although receiverships were down slightly in 2024 compared with 2023, we are seeing an uptick in the number of receiverships in 2025 with most of these being commenced by non-bank lenders. This suggests that the forbearance shown by creditors in recent years on account of the pandemic is dissipating. While recourse to corporate rescue processes such as examinership and the Small Company Administrative Rescue Process (SCARP) was low in 2024 with just 10 and 30 examinerships and SCARPs recorded respectively, data for the first six months of 2025 reveals increases in the numbers accessing both of these processes which is positive news considering the economic and societal benefits of corporate rescue. The context behind these figures is also considered in this article. The cessation of the Revenue Commissioner's debt warehousing scheme in 2024, the reinstatement of the 13.5% rate of VAT for the hospitality sector up from 9% at the end of 2023, and other pressures on business are offered as possible reasons for the rising number of corporate insolvencies. It is also suggested that in light of the wider economic environment, companies may have been unable to access examinership and SCARP having regard to how the 'reasonable prospect of survival' test is assessed. Companies must meet this test as well as other criteria in order to access examinership and SCARP. In determining whether the company has a 'reasonable prospect of survival', the court, in the case of examinership, or process adviser, in the case of SCARP, will consider, inter alia, the wider economic context and the conditions of the market in which the company operates. Therefore, having regard to the well-publicised issues affecting the retail and hospitality sectors in particular (the sectors from which most of the insolvencies in 2024 came), it is possible that determinations were made by companies in those sectors that they would fail to meet the 'reasonable prospect of survival' test and thus opted for liquidation as opposed to rescue. The article concludes that while the insolvency figures for 2024 are notable when compared with preceding years, 2024 represents a return a normal after years of artificially low insolvency figures owing to the pandemic. A further positive conclusion is drawn about the resilience of the Irish economy and of many Irish businesses on account of the lower-than-expected insolvency figures in 2024 and so far in 2025. For instance, in the context of 2025, it was predicted that corporate insolvency rates would surpass 1,000 but based on data for Qs 1-3 of 2025, corporate insolvencies look set to mirror if not improve upon 2024 figures despite international geopolitical headwinds. There are reasons to be hopeful therefore as we approach the end of 2025 and enter 2026.
    Item Type: Article
    Keywords: Rise; Corporate Insolvencies; Return; Normal; Something Deeper;
    Academic Unit: Faculty of Social Sciences > Law
    Item ID: 20645
    Depositing User: Michael Boland
    Date Deposited: 06 Oct 2025 11:19
    Journal or Publication Title: Commercial Law Practitioner
    Publisher: University College Cork
    Refereed: Yes
    URI: https://mural.maynoothuniversity.ie/id/eprint/20645
    Use Licence: This item is available under a Creative Commons Attribution Non Commercial Share Alike Licence (CC BY-NC-SA). Details of this licence are available here

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