Company insolvencies in the first quarter of the year rose by 13% in real terms on the previous quarter to reach the highest level in four years, according to the latest official figures released today.
The figures show that excluding one-off ‘bulk insolvency events’, there were 4,462 business insolvencies in the first three months. The highest number of insolvencies was in construction, followed by the retail, wholesale and vehicle repair category.
Paul Barber, North West regional chair of the insolvency and restructuring trade body R3 and a partner at Begbies Traynor, said: “Insolvency has risen up the agenda over the first quarter, with a roll-call of high-profile names – Carillion, Maplin, Toys R Us – entering a statutory insolvency procedure, and widely-reported restructuring efforts at a number of other chains, especially in the casual dining space.
“A raft of profit warnings and lower than expected corporate results in the first three months of the year point to a difficult trading period over the festive season, while Black Friday at the end of November pulled consumer spending forward, eating into the success of the New Year sales. The ‘Beast from the East’ and repeated episodes of bad weather didn’t help, either. Indeed, the growth statistics indicate there was barely any economic growth in Q1 at all.
“A lot of firms in a lot of different industries are facing changes in their sectors which are systemic, not cyclical. In retail, the rise of online shopping and the subsequent need for a seamless and slick e-shop is, for many firms, inescapable. Productivity rises have been sluggish at best for years, and a lot of directors need to take a step back from their businesses to look at where their market is going, and what they need to do to prepare for structural changes.
“It’s never too soon for a company to seek expert advice on its market position, and its viability as a going concern. It’s tough going for a lot of firms out there, and speaking to a regulated and reputable adviser could make all the difference.”