THERE were 56 company insolvencies in Northern Ireland between January and March - four times that of the same period a year earlier.
And while the collapses remain lower than pre-pandemic levels, it appears businesses are starting to feel the pressure, and for many it is out of the frying pan and into the fire, with inflation out of control, energy at unsustainable prices, and Covid recovery loans having to be paid back.
Data from the Department for the Economy shows that over the three-month period there were 28 Creditors Voluntary Liquidations (CVLs), which is a procedure initiated by the directors of a company to voluntarily bring about the end of the business.
There were also 19 compulsory liquidations, five administrations, three Company Voluntary Arrangements (CVAs) and one administrative receivership.
The total business liquidation rate in the year to March in the north was 19.1 per 10,000 active companies, an increase of 8.4 (from a rate of 10.7 per 10,000 active companies) in the comparable period in 2021.
And although it appears the pandemic is largely under control, the debt accumulated by many companies to stay afloat is substantial.
Following the various Covid loans, it now payback time, with BounceBack and CIBLS loan repayments proving a significant drain on companies' working capital.
One analyst told the Irish News: "Many businesses which were propped up by government grants and support are now running out of money and are having to call it a day.
"Expect the data to worsen, potentially materially, during the second quarter. For many businesses, the current headwinds are a bridge too far."
Supply chains are collapsing in some sectors, with suppliers going bust due to increased logistic and transport costs, fuel increases and utility costs, and that is trickling down to businesses.
Meanwhile, a separate report has revealed a 44 per cent year-on-year rise in Northern Ireland firms showing signs of ‘critical distress’ in the first quarter of 2022.
The latest ‘Red Flag Alert’ data from insolvency specialists Begbies Traynor showed an eight per cent rise between the final quarter of 2021 and first three months of this year.
The category includes companies that have financial problems such as county court judgements (CCJs) of more than £5,000 filed against them.
The data showed 8,670 businesses in Northern Ireland experienced instances of ‘significant’ distress in the first quarter of the year. That includes firms facing CCJs below the £5,000 mark.
While there was a marked year-on-year drop in the lesser category of business distress, insolvency expert Lawrence O’Hara, who heads Begbies Traynor’s Northern Ireland operation, has warned warning businesses here to prepare for difficult times ahead in the face of ongoing global uncertainty amid the escalating energy crisis and conflict in Ukraine.
“While many will be relieved to see that early business distress has not risen in the last quarter, we are concerned that this might give business owners a false sense of security and distract from the huge ongoing challenges.
“As beleaguered businesses reel from two years of Covid disruption, reserves are likely to be running low as we face the most severe energy crisis since the 1970s.
“And this, combined with the worsening situation in Ukraine and further lockdowns in China adding to supply chain problems, means that the economic landscape is likely to be extremely challenging in the short-term.”