high-profile insolvency practitioners, Mike Jervis, has said the record numbers
of company collapses is distracting attention from the businesses embroiled in
last-ditch restructuring moves to survive.
Much has been made of the spike in business failures, but Jervis said the
wave of companies teetering on the brink of collapse was just as pressing an
‘The actual insolvency statistics show only part of the picture. There are
many restructurings either not involving insolvency or using light-touch
insolvency techniques to salvage viable businesses.’
Jervis said the companies would need to think carefully about their options
in good time, while keeping a close eye on their financial position.
‘Those businesses most likely to survive recession will turn to management
teams and advisers experienced in turnarounds. They will plan for different
scenarios and will be obsessive over their cashflow management.’
The latest PwC analysis into corporate insolvency numbers show the downturn
is showing no signs of abating, with 5,483 companies becoming insolvent in Q1
2009. This represents a 14% increase on the previous quarter and a 57% increase
of the same quarter of 2008.
The worst affected sectors are construction (829 companies), manufacturing
(734), retail (705), hospitality and leisure (312) and real estate (235) – all
of which are showing a five-year high, the firm said.
Companies are further under the cosh as the lack of insurance guarding
against the threat of company collapses is removed.
This week Bay Trading, a division of clothes retailer Alexon was forced into
administration after credit insurance was denied to its suppliers. In its
prelims Alexon’s auditor said it would be including an emphasis of matter
paragraph in its audit report. This set off a chain reaction of events, starting
with trade credit being pulled from its suppliers and ending with the division’s
‘UK businesses are still suffering from the effects of the global recession
as more enter into insolvency with no apparent signs of a slowdown in the near
future,’ added Jervis.
‘At PwC we are currently working with businesses across the UK, in many
sectors and of varying sizes. Many companies are leaving it too late to ask for
Steve Absolom and Will Wright from KPMG Restructuring have been appointed joint administrators to City Motor Holdings and associated companies
Partners from Johnston Carmichael have been appointed as joint administrators to Axon Well Interventions Products UK
Begbies Traynor have been appointed administrators of William Anelay Ltd, York, one of Britain’s longest-established construction and heritage restoration companies
Smith & Williamson has been appointed administrators of charity 4Children