BusinessBusiness Recovery‘Federal Mogul collapse distorts the truth’

'Federal Mogul collapse distorts the truth'

Fourth-quarter insolvency figures are distorted because of the collapse of Federal Mogul and reflect the effects of 11 September on the UK, according to leading insolvency experts.

US-based Federal Mogul has 133 UK subsidiaries and went into administration and bankruptcy on 1 October, the beginning of the fourth quarter. But government calculations record the company’s administration as 133 separate administrations, distorting figures.

A total of 3,798 companies became insolvent last quarter, up 1.8% on the previous quarter. If Federal Mogul had been counted as one company, the figure would be 3,666, fewer than the third quarter.

Businesses have been hit hard since 11 September. UK tourism has suffered, resulting in falling revenue in areas such as luxury goods, hotels and restaurants.

Insolvency practitioners say the figures, published last week, do not reflect reality because it is one group that has gone under, not several companies. Keith Goodman, president of the Insolvency Practitioners Association told Accountancy Age: ‘If there is a group of companies which have a large number of subsidiaries, such as Federal Mogul, it will show a large number of insolvencies.’

The IPA president said the rise was not surprising. ‘Everyone was expecting it. 11 September topped it for a lot of UK companies.’

Related Articles

Investment firm acquires Avon Steel Company Limited

Business Recovery Investment firm acquires Avon Steel Company Limited

6d Emma Smith, Managing Editor
Manchester law firm enters into administration

Business Recovery Manchester law firm enters into administration

6d Emma Smith, Managing Editor
KPMG appoints new global head of insolvency

Business Recovery KPMG appoints new global head of insolvency

3w Emma Smith, Managing Editor
EY hired by Carillion to review finances

Accounting Firms EY hired by Carillion to review finances

5m Alia Shoaib, Reporter
Using insolvency as a debt recovery tool

Business Recovery Using insolvency as a debt recovery tool

6m Emma Smith, Managing Editor
UK government should support mid-sized businesses to create a ‘new economy’ post-Brexit, says BDO report

Business Recovery UK government should support mid-sized businesses to create a ‘new economy’ post-Brexit, says BDO report

8m Alia Shoaib, Reporter
Over 800 jobs saved as Endless LLP acquires Jones Bootmaker

Business Recovery Over 800 jobs saved as Endless LLP acquires Jones Bootmaker

9m Emma Smith, Managing Editor
FRP Advisory expands operation with new office, partner appointments

Accounting Firms FRP Advisory expands operation with new office, partner appointments

10m Emma Smith, Managing Editor