Restructuring update — Q3 2022

A challenging winter ahead

€1.6bn

The debt owed by failed businesses in the year to date.
49%

The increase in business failures in Q3 2022 compared to Q3 2021.
80%

The quarter-on-quarter increase in Dublin business failures in Q3.
3x

The multiple of annual liquidations in the UK versus Ireland.

While many businesses survived the COVID-19 pandemic, business failures are beginning to increase slightly. Irish businesses now face several challenges including:

high inflation
increasing interest rates
higher energy costs
supply chain constraints

With increased inflation and energy costs set to be followed by rising interest rates, we expect to see a greater level of restructuring activity in the final quarter of 2022 and into 2023.

Direct economic impact

The direct economic impact from business failures in the year to date is €1.6 billion.

Q3 business failure insights

The business failure rate per 10,000 companies increased by 31% from Q2 2022 to Q3 2022.

PwC Insolvency Barometer

The annual failure rate is running at 17% of the peak in 2012.

Q3 industry and county insights

The arts, entertainment and recreation and hospitality sectors recorded the highest rate of business failure in Q3 2022.

Dublin had the highest rate of business failures in Q3 2022—its failure rate increased by 80% from Q2 2022.

Ireland's liquidation rate versus the UK

UK liquidations are at record levels and higher than those recorded during the global financial crisis.

Key actions to take now

Assess your working capital

Companies must reappraise and shore up their liquidity and working capital requirements to address the unwinding of government support and debts accrued during the pandemic, while meeting renewed customer demand and delivering delayed investment.

Identify multiple funding sources

The limited availability of further government support will increase reliance on existing lenders, shareholders and access to the capital markets, which may be less forthcoming in sectors where the prospects for recovery and long-term growth are less clear.

Monitor your cash flow

In this uncertain and potentially stop-start pathway to recovery and economic growth, it is essential to monitor cash flow. Companies must develop realistic forecasts that take account of potential varying recovery scenarios and, in particular, increasing rates of inflation in Ireland and around the world.

Consider the future

The immediate demands don't just include day-to-day expenses, but also funding for future growth and adapting to the trends reshaping marketplaces and economies.