Newspaper article The Evening Standard (London, England)

Companies in Trouble Double to Record High; CITY BRIEFING

Newspaper article The Evening Standard (London, England)

Companies in Trouble Double to Record High; CITY BRIEFING

Article excerpt


THE number of British companies on the brink of insolvency has more than doubled over the past year because of the economic slowdown, a report reveals today.

Figures from business rescue and restructuring specialist Begbies Traynor show a record 11,492 companies ran into "critical" financial problems in the fourth quarter of 2005, a 120% increase on the same period a year earlier.

These are firms that have petitions to wind up or striking-off notices filed against them, both of which may force them ultimately to cease trading.

A further 118,430 experienced " significant" difficulties such as sustained trading losses, weak balance sheets, mounting debts or declining turnover.

For 2005 as a whole, Begbies said the number of critically-troubled companies rose by more than a third to 34,970.

In London, the number of companies on the "critical" list leapt by 105% to 2156. The capital's construction firms are bearing much of the pain, having been hit by the housing slowdown and fierce competition which has seen many companies' profit margins shrink to nothing.

Nick Hood, senior London partner at Begbies, said: "These figures make for depressing reading because behind these numbers are people's livelihoods and security. Once in a formal insolvency procedure, sadly far too few companies ever get themselves back on an even keel because the rot is too far set in."

Hood said low interest rates had been masking fundamental problems faced by thousands of firms. He predicted conditions would get worse before they got better. Casualties tend to be undercapitalised, uncompetitive small and medium-sized companies, or those with management teams without a Plan B when the going gets tough. Big names that have recently gone to the wall include off-licences chain Unwins, fashion group Kookai and crisp maker Golden Wonder.

. Sock Shop has gone bust for a third time, hit by slow consumer spending and rising costs. Andrew Turpin of administrators Poppleton & Appleby said the chain would continue trading as he sought buyers. …

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