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Irish company births and insolvent liquidations during the COVID-19 shock

Author

Listed:
  • McGeever, Niall

    (Central Bank of Ireland)

  • Sarchi, Cecilia

    (Central Bank of Ireland)

  • Woods, Maria

    (Central Bank of Ireland)

Abstract

New company registrations fell sharply between March and May 2020, coinciding with the introduction of restrictions to reduce the growth rate of COVID-19 cases. This decline occurred in all sectors, but was largest in Accommodation and Food and in Arts, Entertainment and Recreation. The rate of new registrations rebounded in the summer to almost pre-pandemic levels in September, although levels remain lower than in 2019. The insolvent liquidation rate fell in April due to the temporary inability of company directors to convene creditors’ meetings safely. Insolvent liquidations returned to prepandemic trends over the summer and, despite indications of significant financial distress among firms, there is no evidence as yet of a marked increase in insolvencies. The cumulative effect of government supports, loan payment breaks, forbearance from other creditors, and pre-existing financial buffers have likely held down the insolvent liquidation rate.

Suggested Citation

  • McGeever, Niall & Sarchi, Cecilia & Woods, Maria, 2020. "Irish company births and insolvent liquidations during the COVID-19 shock," Economic Letters 13/EL/20, Central Bank of Ireland.
    • Handle: RePEc:cbi:ecolet:13/el/20
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    File URL: https://www.centralbank.ie/docs/default-source/publications/economic-letters/vol-2020-no-13-irish-company-births-and-insolvent-liquidations-during-the-covid-19-shock-(mcgeever-sarchi-and-woods).pdf?sfvrsn=4
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    Cited by:

    1. McCann, Fergal & McGeever, Niall, 2022. "Enterprise policy issues for distressed businesses following the unwinding of pandemic supports," Financial Stability Notes 9/FS/22, Central Bank of Ireland.
    2. Durante, Elena & McGeever, Niall, 2022. "SME Credit Conditions in the Pandemic Recovery," Financial Stability Notes 2/FS/22, Central Bank of Ireland.

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