Corporate insolvencies are on the rise

Corporate insolvencies are on the rise

Recently published July and September Insolvency reports show that the number of businesses that are unable to pay back money they owe to others is on the rise. In the reports the results were shown to be slightly higher than previous quarter.

Andrew Tate, president of insolvency and restructuring trade body R3, said “A quarterly rise in corporate insolvency numbers is not necessarily an indicator of ‘Brexit’-related financial problems for UK companies. At least, not yet. While companies dependent on imports are struggling with the falling value of the pound, anecdotal evidence from our members suggests the vote to leave the EU has not led to more insolvency procedures due to factors other than the exchange rate. However, we are hearing that more companies have been coming to restructuring experts for advice.”

“According to R3 research, UK companies remain in good shape. Only 21% of businesses – close to a record low – surveyed by R3 and BDRC for our most recent Business Distress Index report a key indicator of distress, while 62% report at least one sign of growth.” So long as the economy continues to grow steadily insolvency numbers are unlikely to rise too much, but, of course, that all depends on what impact ‘Brexit’ has on the economy.”

“Corporate insolvency numbers stabilised earlier in the year around pre-financial crisis levels following a prolonged downward trend, and insolvency numbers are pretty much in line with where they were this time last year. Occasional quarterly increases are not unexpected.”

To read the full article click here: Credit Connect

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