Partly Cloudy

Partly Cloudy

max temp: 14°C

min temp: 8°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

More than 600 vehicles - cars, buses, military vehicles and motorcycles - taking part in the 46th annual Ipswich to Felixstowe Historic Vehicle Run. Christchurch Park. Left to right, Ross and Stuart Holman.

Hundreds of car owners took advantage of one of the first good days of the year to take part in Sunday’s historic vehicle run from Ipswich to Felixstowe.

Ipswich & District TUC are celebrating another May Day Festival in Alexandra Park on International Workers Day.

Perfect spring weather finally arrived in Ipswich for the town’s May Day festival which brought out the crowds to Alexandra Park on Sunday afternoon.

Kesgrave 5K Fun Run starting and ending at The Bell Inn.

It was a record-breaking turn out at the ninth annual Kesgrave 5k fun run.

Yum Yums Cookery School, a nonprofit community organisation which runs cookery classes at primary schools in Ipswich, has received funding worth £500. Children at Whitehouse Primary celebrating the news. Adults L-R Dawn Burrows, Charlotte Burrows, Ron Impey, Emma Youngman.

An after-school cookery class scheme is celebrating after receiving a vital funding boost.

34th annual Heritage Coast Run/Walk organised by the Rotary Club of Saxmundham and District
13 mile start

Runners travelled from as far as Scotland to take part in a “unique” challenge along the Suffolk coast.

Foxglove Gardens

There is a dip in Foxhall Road, a depression that is in geographical terms the start of the Mill River, writes John Norman, of the Ipswich Society.

Auschwitz Birkenau

The stories of the holocaust have been recounted in history lessons for decades but there is a difference between what we read in books and what we see for ourselves as 15 Suffolk pupils discovered on a visit to Auschwitz .

Should cyclists be allowed to go through red traffic lights when it is safe?

A cyclist rode through a red light and turned left while I was walking the dog this week, writes Andy Russell.

Firefighters from Essex and Suffolk tackled the fire at Ashen.

Firefighters from Suffolk and Essex spent much of Saturday night tackling a blaze in a 3,000-tonne stack of straw at Ashen, near Stoke by Clare.

Once upon a time, shopping was my therapy, writes mum-of-three Ellen Widdup.

Most read

Most commented

HOT JOBS

Show Job Lists

Topic pages

Streetlife

Newsletter Sign Up

Great British Life

Great British Life
MyDate24 MyPhotos24