Insolvencies down in Q2
Jul 25 2011
The latest figures show insolvency can be avoided
Administration appointments in England are at their lowest level since Q4 2007, well before the financial crisis, research finds.
There were 553 administrations from 1 April to 30 June 2011 representing a 14 per cent decline on the first three months of 2011 (643) and a fall of 13 per cent against Q2 2010, according to Baker Tilly Restructuring and Recovery LLP.
The figures show a decline across all regions in England except for the North East which has seen a modest increase.
Despite a number of high profile, high street failures that have grabbed the headlines, such as Jane Norman, Habitat and Focus, the decreasing administration figures indicate a continuing trend of restructuring to avoid formal insolvency, according to Baker Tilly.
Confectioner Thorntons’ recent announcement that it is to close almost half of its 364 stores and HMV’s sale of its Canadian stores to Hilco both demonstrate a growing trend towards restructuring, says the firm.
Baker Tilly believes that this is a step businesses increasingly will have to look at in order to survive, with traditional credit lending not as readily available and more regular distraint action taken by HMRC against defaulting debtors.
Matt Haw, partner at Baker Tilly Restructuring and Recovery LLP, says, ‘The latest administration figures show that if businesses can maximise their available resources during difficult times, there are plenty of options available and insolvency can be avoided. Detailed management of cash flow is vital in such a tight environment where cash remains king in navigating through trading fluctuations.
‘For some businesses, flexibility in their financial planning will be essential to their survival. Looking at alternatives to traditional bank lending such as asset-based lenders and private equity can offer new opportunities and, for the right businesses, additional working capital should allow them to manoeuvre through this stagnant economic phase.’
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