Restructuring Update Q4 2024

Overview

PwC’s latest Insolvency Barometer, analysing 2024 insolvencies, reveals significantly lower insolvencies than expected in Q4 2024 and for the entire year. There were 852 insolvencies in 2024, 16% higher than the 734 insolvencies in 2023 but significantly lower than the 900+ expected for 2024.

The lower-than-expected insolvency numbers recorded in Q4 2024, compared to the same quarter in 2023, reversed the upward trend observed in previous quarters. For example, at the end of Q3 2024, insolvency numbers were 34% higher (659) compared to the same period in 2023 (491). However, Q4 2024 insolvency numbers (193) were 21% lower when compared to Q4 2023 (243). This highlights the resilience of the Irish economy and many Irish businesses.

The average lifespan of companies declaring insolvency

For the first time, our analysis reveals the average lifespan of companies declaring insolvency. The average lifespan of the 852 companies declaring insolvency in 2024 was 13 years, with the shortest being ten months and longest being almost 60 years.

SCARP utilisation remains relatively low

The number of SCARPs initiated in 2024 was just 30, compared to 33 in 2023. Approximately one in every 20 insolvent companies are opting for a rescue process such as SCARP or examinership. This underutilisation suggests that most insolvent companies have fundamental profitability issues and are opting for liquidation rather than a rescue process.

Retail accounts for almost one in every four insolvencies as hospitality remains steady

Retail recorded the highest number of insolvencies of any sector in 2024, accounting for 200 of the 852 insolvencies (24%), with a rate of 32 per 10,000 businesses.

Hospitality insolvency numbers remain steady, with 150 insolvencies for the year (18% of total 2024 insolvencies), representing 77 per 10,000 businesses, one of the highest of any sector.

Significant decrease in receivership appointments

Receivership appointments in 2024 fell by 13% compared to 2023, with 98 recorded in 2024. Lenders continue to show a lot of patience, in line with the past few years.

Five ways to optimise your company’s cash culture

1. Make cash everyone’s business

Cash is bigger than the treasury and finance departments. They both have a key coordinating role in effectively managing cash, but it’s the operations of the business that make daily decisions that impact cash. Push cash up everyone’s agenda.

2. Cash can mean different things to different people, so make cash relevant to everyone

Having a common cash language across the organisation (operations and finance) is vital to instilling a proactive cash-conscious culture that produces:

• reliable cash forecasting;
• effective expenditure management and tactical actions;
• ash reporting and incentivisation, tailored to audiences across the organisation;
• management of cash tax and government incentives;
• centralised management of true cash availability and foreign currency cash; and
• effective management of banking and other financing facilities.

3. Forecast cash and conduct appropriately granular scenario planning

This should involve operations and finance teams, as they are essential in reflecting and understanding the real operational risks in the current volatile market.

4. Understand and share your minimum cash thresholds

This will help colleagues in the wider business manage their daily decisions and cash commitments (once the decision is made, the cash is committed).

5. Optimise supplier and customer working capital terms and relationships

This will help conserve and generate the cheapest form of cash available to you.

We are here to help you

The months and years ahead will be challenging for many Irish businesses, but we are ready to help you. Contact us today.