BusinessBusiness RecoveryCredit crunch hits high street

Credit crunch hits high street

Business insolvencies are set to climb, experts have indicated, after a long plateau in company failures

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.

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