Business

Northern Ireland 'may be facing an insolvency tsunami when courts reopen'

There was 80 per cent fewer business failures in Northern Ireland in lockdown compared to last year - but this has been attributed to the court system being closed down
Gary McDonald Business Editor

THE north is facing a possible September insolvency tsunami, new figures suggest.

For while thousands more UK businesses permanently pulled down the shutters during lockdown, the number of insolvencies in Northern Ireland in April and May was almost 80 per cent fewer than the same period in 2019.

This is because the closure of the courts meant there could be no new compulsory liquidations during those two months.

And the fear is that when the summer recess ends, the number of registered company failures in Northern Ireland could hit new record highs as scores of already struggling businesses will finally tip over the edge.

Analysis for the whole of the UK, based on notices in the London Gazette, shows that around 5,000 companies filed for insolvency since March, though this was down from 6,500 last year, as government funding meant they went into effective hibernation.

The drop follows a spike in March around the start of lockdown, since when Treasury says it has spent £160 billion in support for businesses, ranging from loans to business rate relief, tax deferrals, top-up grants, a future fund for blue chip companies and the Bank of England issuing bonds to corporations.

In Northern Ireland, there were 28 business insolvencies between March 24 to June 30, compared to more than 100 in the same period a year ago.

In Belfast, just nine companies went bust compared with 56 last year, and only in Newry, Mourne and Down did the numbers rise (up from four to seven).

Four of the north's 11 council areas had no recorded business failures at all, including Mid-Ulster and Mid & East Antrim..

But when the government's life-support measures end and the court service expects returns to some semblance of normality in September, the number of Northern Ireland firms going bust could turn from a trickle to a deluge.

Meanwhile figures also show that there has been a resurgence in new businesses being set up during lockdown, with more than 2,000 companies registered in Northern Ireland from April to June.

About a quarter of these (489) were in Belfast, and this was followed by Newry, Mourne and Down with 352 business and Armagh, Banbridge & Craigavon (198).

The other eight council areas saw between 110 and 166 new start-ups being registered.

The registrations are led by firms in online retail and management consultancy but include a range of areas including home construction, health activities, hairdressing and beauty treatments, and domestic software development.

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