| 15.3°C Dublin

Court judgments force firms to pay back €36m debts

Irish companies were forced to repay a massive debt of €36.4m in court judgments last year.

The value of court judgments (CJs) increased by 54pc compared to 2008, according to new figures. The total number of CJs fell from more than 2,000 to 1,531, but the average value of a judgment doubled from €11,452 to €23,778.

Buckling under the weight of the significant downturn in the building industry, the construction sector represented 31pc of the total number of CJs filed while there were €2.7m judgments in real estate and renting companies.

Michael Gannon, head of business and account develop-ment at ICC Information explained that CJs were a leading indicator of insolvency, reflecting the corporate financial health of a company.

"The increase of €13m in court judgments to €36m in the last 12 months highlights the difficult trading conditions of 2009, but it is also worth bearing in mind that the number of court judgments actually fell by 25pc," he said. And he anticipated that the trend in the larger value of CJs would continue throughout 2010.

Manufacturing and business activities represented 14pc of the total figure while the struggling hospitality sector faced €2.9m worth of CJs.

Dublin companies accounted for the majority of all judgments with 36pc and reaching €13m within the year. This was followed closely by companies based in Cork with 13pc and €4.6m while firms in Kilkenny, Clare, Longford, Carlow and Laois were the lowest offenders in 2009 with less than 1pc of the total value each.

The figures were released as it was revealed that there was a 118pc rise in receiverships, as the total number of insolvencies increased 82pc to 1,406.

This data, which was compiled earlier this month by insolvencyjournal.ie, outlined that the services and hospitality sectors experienced more than 400 insolvencies.

Experts said that the high rate of failures was expected to continue throughout the coming year and linked many of the insolvencies to "natural failures" from the high level of start-ups in recent years, coupled with the "knock-on effects" of a brutal 2009.

In 2009, household names such as Liam Carroll's Zoe Group, O'Brien's Sandwich Bars and the Belgard Motor Group submitted to insolvency procedures.