The latest statistics from the Insolvency Service have shown a substantial rise in the number of retail administrations and retail company voluntary arrangements (CVAs) for the first quarter of 2011, compared with the last quarter of 2010. Administrations in retail have seen a 55% jump from 80 in the Q4 2010 to 124 in Q1 2011, while CVAs in retail have risen by 30% from 23 in Q4 2010 to 30 in Q1 2011. The overall number of administrations was up by nearly a quarter from 642 in Q4 2010 to 782 for Q1 22%.
Brian Green, restructuring partner at KPMG, commented:
“The figures show that the disparate negative economic indicators putting pressure on consumers are materialising in business failure. There is definitely a sense that the extended period of treading water, enabled by low interest rates, is coming to an end. The pain is not just being felt on the high street; the overall number of administrations went up by 22% in the first quarter of the year, compared with the last quarter of 2011. On a positive note, a discernible increase in corporate insolvency shows that lenders are starting to take definitive action on distressed situations, signalling the bottom of the market and the upturn which follows is on its way.
“The recession this time around has been different to those which have gone before in that the severe crash, typical of an economic downturn, has been avoided. While it has been shown that an economic fall can be cushioned, the underlying financial problems – such as too much debt and reduced demand - still need to be resolved and it now feels like we are reaching the end of the insolvency hiatus and activity is increasing.”
Do you agree or do you think retail insolvencies will increase even further?
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