Business failures ‘levelling out’

The number of companies that have gone out of business in the year to date is up by 3% on the same period in 2011, but a “levelling out” of the extent of business failures is becoming evident.

New data from corporate recovery firm, Kavanagh Fennell shows that the total number of corporate insolvencies — for the year up to the beginning of November — stood at 1,547.That constitutes a 3% year-on- year increase.

There were 139 failures noted in November, alone.

The new figures also show that the construction sector — unsurprisingly — continues to be the most severely affected; accounting for 25% of this year’s total insolvencies.

The retail sector also continues to be hit — 204 companies going out of business since January; the same number as in the first 10 months of 2011.

According to Kavanagh Fennell’s Ken Fennell, the overall insolvency figure for this year is likely to amount to 1,700 — which would be in line with last year and would symbolise progress.

“The figures show a levelling out of corporate insolvencies, which is a positive sign.

“However, the business environment remains challenging and it will be interesting to see the effects of the budget and the consumer spend over the Christmas period,” he added.

More positive aspects of the latest survey were that the number of insolvencies in the hospitality sector fell by 22% year-on-year in the first 10 months of 2012.

It also noted a shift in the type of corporate recovery measures being adopted by firms introuble; with receiverships up by 43% and examinerships rising by 73%.

The latter ties in with a change in legislation, making it easier for struggling SMEs torestructure their debt.

According to MrFennell: “Changes to government legislation, to reduce the cost of examinerships, will allow a business to continue to trade and restructure; preserving employment and work in progress, as well as delivering a better return to creditors than would be the case in a winding-up.”

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