More than one in three West Midlands firms facing growing insolvency risk
Companies in the West Midlands are facing up to a growing risk of insolvency, according to the latest figures from insolvency and restructuring trade body R3.
Data from February reveals that more than one in three firms were deemed to be at above average risk of insolvency in the region.
The research shows that 36.4% of firms in the West Midlands – equating to more than 101,000 – were at risk, a dramatic rise from February 2017 when 24% of firms were in a similar position.
The situation is at its worst in the region’s transport and haulage sector, as 44.9% of firms were at above average risk of insolvency – only Yorkshire had a greater number of firms in the sector under threat.
This compares with the wider UK average for transport and haulage of 40.2%, which highlights the scale of issues affecting firms in the sector.
All of the figures are compiled using Bureau Van Dijk’s Fame database, and it is better news for manufacturing firms in the West Midlands.
Around 28.5% of firms were deemed to be at above average risk of insolvency, which was the lowest figure for all regions in the UK apart from in Northern Ireland.
However this compares favourably with manufacturing firms in Wales and the South West of England where 36.4% of firms are at increased risk of insolvency, nearly 5% higher than the national average.
R3 Midlands chairman Chris Radford said that while there are glimpses of regional positivity in the latest figures, the “overall picture is a cause for concern”.
He points to the fact that the number of businesses deemed to be at risk of insolvency in the first months of this year is higher than at any point in 2017.
Any firm facing financial difficulty should look to act sooner rather than later as this increases the likelihood of finding a suitable recovery or restructuring solution for the business.
It is not necessary to wait until being on the brink of insolvency before taking action.
By Phil Smith