New wave of business failures forecast
ACCOUNTANCY firm KPMG yesterday warned of a “second wave” of administrations despite reporting a substantial drop in the number of corporate insolvencies during June.
ACCOUNTANCY firm KPMG yesterday warned of a “second wave” of administrations despite reporting a substantial drop in the number of corporate insolvencies during June.
“We have seen average numbers of around 350 administrations a month since the beginning of the year but the latest monthly figures are much lower at 178, said Ian Corfield, director of restructuring at KPMG in East Anglia.
“While we are entering the quieter summer months, such a dramatic drop of almost a half is very unusual given the current economic climate. We are not convinced, however, that this indicates an upturn in sentiment; more a temporary reprieve in advance of a second wave of insolvencies.”
Mr Corfield said the decision by HM Revenue & Customs to allow companies to delay tax payments had been buying time for some companies while lenders, following a recent emphasis on debt for equity swaps, were now preparing for a “significant” increase in insolvencies towards the end of the year.
“The total number of insolvencies so far this year is at 1571, some way behind the 5,000 we predicted for 2009, but our conversations with businesses and lenders suggest this number will be reached quickly after the holiday season with a wave of insolvencies in quarters three and four,” he said.
Mr Corfield added that time was running out in particular for businesses in a number of sectors where conditions had not improved and were unlikely to do so for some time.
Most Read
- 1 London couple transform Suffolk home into an 'intimate' lifestyle retreat
- 2 What time will the Red Arrows be flying over Suffolk this weekend?
- 3 Forbidden Suffolk: 5 more places you can’t visit in Suffolk
- 4 Revealed: The most popular Suffolk fish and chip shop
- 5 The night Town beat Real Madrid - and why they're still part of elite club
- 6 Driver being taken to hospital after car ends up on roof in field
- 7 Two motorbikes stolen after break-in at Suffolk home
- 8 When will bins be emptied during the Platinum Jubilee Bank Holiday weekend?
- 9 Village suffers power cut for 7 hours after vehicle hits electricity pole
- 10 'Rare' home of former socialite and artist goes up for sale for £1.5m
“We expect to see further fall out in the automotive sector, particularly the supplier base, where many companies have ever decreasing options in the absence of demand,” he said.
“Commercial property is a sector whose problems can't be brushed under the carpet for much longer. With billions of refinancing needed by the end of the year, it looks set to suffer in the latter half of the year.
“September is likely to be the crunch month for many businesses in tourism and leisure with the busiest period of the year over. With demand expected to be at new lows, even larger industry players could be affected.”
