Minimal economic growth fails to curb first quarter insolvencies

Minimal levels of economic growth in the first quarter failed to stem a rising trend in insolvencies across the Midlands, new data shows.

According to the Midlands branch of insolvency and restructuring trade body R3, insolvency rates have shown little sign of slowing in the first three months of the year.

This follows data from the Insolvency Service which reveals that underlying corporate insolvencies increased by 13% between January and March when compared to the previous quarter.

That figure is also 0.6% higher than in the same period one year ago and is reflective of a number of issues that have heavily influenced the economy since the start of 2018.

R3 Midlands chair Chris Radford has pointed to the high profile cases of Carillion, Maplin and Toys R Us, alongside numerous other restructuring cases in the region.

He explained that a major issue resulting from those cases is a “domino effect” on suppliers and customers as those in the supply chain face up to financial difficulties.

Despite widespread support being available in those high profile cases, R3 still reported a surge in requests for advice.

Mr Radford has suggested that the rise in corporate insolvency stems from a number of profit warnings and corporate outcomes that did not meet expectations.

For retailers for example, the Christmas period represented a difficult trading time, while poor weather in the early part of 2018 also impacted on sales and business operations.

R3 have turned to government figures which show relatively little economic growth, while numerous directors said they consider their trading position at the end of the financial year when deciding if to continue or not.

Despite the negativity, consumer confidence did recover slightly in March and R3 report opportunities for businesses if they are willing to assess their options.

Those facing difficulties may want to consider an independent business review or seek corporate advice to determine the best course of action to take.

The key is to act early as this increases the number of potential solutions that might be available to the businesses in question.


By Phil Smith


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