Partly Cloudy

Partly Cloudy

max temp: 6°C

min temp: 2°C

Search

East Anglia: Insolvency experts warn of increase in company failures

15:14 07 February 2014

Shay Lettice, regional chairman of  R3, the national insolvency trade body.

Shay Lettice, regional chairman of R3, the national insolvency trade body.

Roger Adams Photographer 2011

Insolvency experts in East Anglia said today that an increase in the number of firms falling into administration does not signal that the economic recovery is running out of steam.

shares

But they warned that the number of corporate failures could start to rise more widely, as firms which have struggled through the recession now succumb to increased competition from stronger rivals.

The number of companies collapsing into administration reached its highest level for nearly two years during the last three months of 2013, according to figures from the Insolvency Service.

A total of 642 administrations were recorded in England and Wales during the quarter, an 18% increase compared with the previous three months and the highest total since the first quarter of 2012.

However, all other forms of corporate insolvency fell during the final quater, with liquidations − which mainly involve smaller businesses − down 7.4% compared with the previous quarter at 3,552, receiverships 6.7% lower at 236 and company voluntary arrangements 19% down at 123.

On an annual basis, administrations were still 7% down compared with 2012 at 2,365, while there was an even bigger fall of 16% when receiverships and company voluntary arrangements are included. Company liquidations were also 7% down on 2012, at 14,982.

Kris Carpen, from KPMG’s advisory practice in East Anglia, said while the increase in administrations represented a warning that it was too early to “herald a full recovery just yet” they did not demonstrate that the upturn was losing momentum.

“The sharp increase in administration appointments for the last quarter of 2013 will come as a surprise to many, running counter to the increasingly numerous positive economic indicators,” he said.

However, he added: “The numbers should not necessarily set the hares running as history has taught us that many businesses, perhaps counter-intuitively, struggle to survive when economies pick up again as over-trading tips them over the edge.”

Shay Lettice of Peters Elworthy & Moore, eastern region chairman of the insolvency professional body R3, said: “The early stages of an economic recovery are often far more difficult for some businesses to negotiate than recessions themselves. Historically, corporate insolvencies increase as the economy exits recession.”

The overall fall in corporate insolvencies over the last quarter was in keeping with the general downward trend since the recession, with insolvencies now a third down from their peak at the end of 2008, but given the recent pick-up in the economy it was not clear how long this trend would last.

“Stuttering growth, low interest rates, and creditor forbearance have helped keep corporate insolvencies lower than they normally would have been since the recession,” he added. “Some businesses will have taken advantage of the extended gap between recession and growth to put their finances back in order, but this won’t be the case for all of them.

“The economic recovery and any future rise in interest rates is likely to put upward pressure on insolvencies. Indeed, recent R3 research found that 96,000 businesses would be unable to repay their debts if interest rates were to rise, while 166,000 businesses said they were having to negotiate payment terms with their creditors.”

shares

1 comment

  • What a load of tory tosh ! you'll be telling us next that 'bailing out' Banks and Countries doesn't mean that they have ;failed' !!

    Report this comment

    freedomf

    Friday, February 7, 2014

Former footballer Marcus Bent. Pic: Steve Parsons/PA Wire.

Former Ipswich Town footballer Marcus Bent has escaped being sent to jail as he was sentenced for confronting two officers with a meat cleaver and a kitchen knife while in a “delusional” state under the influence of cocaine.

Collateral Drawing exhibition at UCS

Launch of `I Spy Drawing’ Family Art Club

Damaged Bus stop in Woodbridge Rd Ipswich

A 21-year-old man has been charged with drink-driving after a car crashed into a bus shelter on the outskirts of Ipswich town centre today.

Poilce investigation work at the scene of the accident on the A12 at Martlesham Heath.

A 20-month-old little girl has died after a crash on the A12 in Martlesham yesterday, police have said.

UCS Clearing possible cover

Just a few months into their course they helped people with life-threatening conditions, unwell patients and, on one occasion, even helped to deliver a baby.

Land off Railway Approach in Felixstowe where a new 30,000sq ft superstore was to be built.

Proposals for new homes have sounded the death knell for hopes of a supermarket and transport interchange in the town centre.

The former Croydon's building in Ipswich which could be occupied by Jack Wills.

Up-market clothes store Jack Wills is still in negotiations aimed at taking over the lease on the former Croydon’s store in Tavern Street, Ipswich.

Woodbridge fundraiser Mandy Hearle (dressed as Ping) launches her latest effort for Médecins Sans Frontières. It's called Books Without Borders and will involve stickers being placed on certain books at Woodbridge Library. Pictured with Helen Scrivener, library manager, Gerry Spiller, puppeteer, and Merryn Whatling

After a year of charity challenges, Woodbridge’s Mandy Hearle could be forgiven for putting her feet up.

Vernon Wilkes' Rolex.

A Rolex watch bought in Canada during the Second World War could sell for double its actual worth at auction next week because of a letter from a former owner.

Most read

Most commented

HOT JOBS

Show Job Lists

Topic pages

Streetlife

Great British Life

Great British Life
MyDate24 MyPhotos24