Retailers are set to suffer in particular as the credit crunch reaches the high street. The next six months will see a spate of leisure and retail insolvencies as tighter credit facilities hit the sector, experts suggest.

More automotive and construction businesses were also expected to enter insolvency. ‘Inter-bank interest rates are up and if that continues we are likely to see an upturn in insolvencies,’ said Nicholas Pike, partner in corporate recovery and restructuring at LG, ‘but I’m not expecting a full-blown recession’.

‘Banks will look at businesses by sector,’ said Nick Hood, senior partner at Begbies Traynor. ‘The turmoil from inter-bank lending will reach commercial enterprises. If you couple that with consumer indebtedness, then you have to look at the consumer-related sectors.’

Hood added that construction firms could be in trouble as they were ‘horribly cash-consumptive’ with low profit margins and were already suffering due to a slowing commercial property market.

‘As it gets more difficult to refinance, there will be restructuring which in turn could include more insolvencies,’ said Carolyn Swain, partner in corporate recovery at Halliwells.

For more click here