More than a quarter of retail businesses run the risk of insolvency in the next 12 months, according to research by an insolvency body.

More than a quarter of retail businesses run the risk of insolvency in the next 12 months, according to research by an insolvency body.

R3 says that 26 per cent of companies listed on the Bureau van Dijk Fame database are currently considered to be in the "current" or "high risk" QuiScore bands.

The QuiScore is a measure of the likelihood of company failure in a 12-month period. 

R3 president Lee Manning says that retail insolvency is a result of difficult economic conditions and that the "cannibalising" of high streets by internet retailers had already cost 21,000 UK jobs since the start of last year.

'Quarter day (the deadline for advance payment of quarterly commercial property rents) will always present a challenge to struggling retailers. Some of their leases were agreed during the good times and will have many years to run at very high rents.

'Negotiating with landlords is key to staving off insolvency, although of course directors must take care to avoid wrongful trading with regard to all their creditors.'

Insolvency law expert Alastair Lomax of Pinsent Masons adds that a "steady stream" of traditional high street retailers entering formal insolvency seems "likely" for as long as consumer spending remains tight.

'Those most at risk are often in the squeezed middle with little to distinguish themselves on price or quality. Such businesses often struggle to reposition themselves when every spare penny is going to pay lenders and landlords in line with terms negotiated during the boom times. Ultimately it is often those creditors who are required to bear the brunt of losses on insolvency.'

See also: How to avoid insolvency