BusinessBusiness RecoveryCompany collapses will rise this year

Company collapses will rise this year

Failures will increase despite lull in corporate administrations this year, PwC warns

COMPANY COLLAPSES will rise this year despite government statistics that corporate insolvencies have fallen.

PwC warns that corporate failures will rise in some sectors because consumer spending remains weak and public spending cuts have yet to be felt, the Financial Times reports.

Company administrations fell to 3,531 in the UK for the second quarter of 2011, a 16% drop from the 4,216 failures in the first three months of the year, according to PwC’s analysis.

Government efforts such as low interest rates and tax deferral schemes have helped struggling business stay solvent, said PwC, though companies are “by no means out of the woods yet,” according to the company’s corporate insolvency partner Mike Jervis, (pictured) who is one of the administrators to Lehman Brothers International Europe.

Jervis highlighted: “There is a high risk of increased insolvencies in the retail, hospitality and leisure sectors over the next 12 months.

“The main short-term challenge is low consumer confidence but the wall of debt that needs refinancing over the next few years is a brewing medium-term challenge.” 

Corporate insolvencies in Scotland increased 17% quarter-on-quarter to 329 in the second quarter of this year, a report by KPMG said.

 

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