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

Niall McGeever, Cecilia Sarchi and Maria Woods
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Niall McGeever: Central Bank of Ireland
Cecilia Sarchi: Central Bank of Ireland
Maria Woods: Central Bank of Ireland

No 13/EL/20, Economic Letters from 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.

Date: 2020-11
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