At the back end of last year, PCR reported on the rise of Corporate Insolvencies, citing several factors as possible contributors. This included rising business rates, an increase in inflation, the weaker pound and a rise in the national living wage. Hardly a surprise then to see that any business operating on the edge would be severely impacted by any one of those factors.

Earlier in the year, it was well documented that some high-profile names such as Carillion, Maplin and Toys R Us were facing severe financial difficulties affecting their ability to continue to trade, with the latter two closing all their stores with immediate effect. More recently, House of Fraser had announced a major restructuring programme aimed at rejuvenating the company with several store closures, including the closure of its flagship store in Central London. In addition, high street retailers such as Dixons Carphone and Mothercare have reported store closures, whilst it was announced only last week that there were to be over 4,000 job cuts at Rolls-Royce.

The warning signs were always there with weak Gross Domestic Product (GDP) growth reported in the first three months of the year potentially playing a pivotal role in the rise of corporate insolvencies. It was also no surprise to see that latest figures from the government’s Insolvency Service revealed that underlying corporate insolvencies rose by 13% in the first quarter of 2018. In fact, government statistics indicate that there has been barely any economic growth in the first quarter of the year.

With both corporate and personal insolvencies already on the increase in 2017, many could point to the fact that the UK economy is looking rather bleak, certainly for the foreseeable future. This comes as no surprise to many business analyst experts, with many citing the current uncertainty in the global economy, not least by the continued ‘dark cloud’ hanging over Brexit as a key contributor to the problem.

The climate to trade for many is becoming extremely volatile, especially for many small businesses who are feeling the brunt of the rise of inflation, flagging consumer demand and below-par domestic growth.

Although some insolvencies cannot be avoided, it is important to understand that for many, the difference between survival and thriving is the ability to manage difficulties better. It is of paramount importance for managers or directors to be able to identify the decline curve at an early stage and look to rectify this before the situation becomes more desperate. If this is done properly, and with the help of professionals who provide regulated advice, it is possible to move away from the fringes of insolvency and back through crisis management, stabilisation and finally onto recovery. Nonetheless, businesses urgently need to look at their contingency plans in order to avoid the predicament being witnessed by some high-profile names that we’ve seen so far this year.

At PCR, we provide regulated advice in assisting company directors and business owners in making informed choices and allowing you to work around the pressures that so many businesses are facing in the current climate.

For help on any insolvency procedures in general, please contact us on 0208 841 5252 to arrange a FREE initial consultation with one of our Insolvency Practitioners. Alternatively, you can contact us on our Priority Contact Form, where we will look to get back to you as soon as possible.

Ahmed Ali

Marketing & Practice Development Executive 

 

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