Reports of corporate insolvencies have exploded in the media in recent weeks, particularly with the demise of holiday giant Thomas Cook, Bonmarche, Gaia Technologies, Gullivers Truck Hire, Axis Fleet Management and others. We have had a number of creditor clients involved in these large insolvencies over the last 12-months, who we have assisted with the recovery of assets from administrators. A recent report from Atradius, the credit insurer is interesting news for businesses across the UK and is a further indication of the challenging economic environment and high political uncertainty.
Not just here but across Western Europe, there has been a 2.7% increase in insolvencies, which has resulted in the first annual upturn in corporate insolvencies, since the global recession in 2008. The worrying figures are attributed to a number of factors, one of which falls to Brexit and the uncertainty around this. The uncertainty has led to doubts over the recovery of sterling. However no matter what the outcome of Brexit, which has been dragging on it seems that there will be some sort of effect, as there are suggestions that a no-deal Brexit, or further delays are likely to put additional pressure on failure rates. Worsening exchange rates have killed off some low margin importers, but this can’t all can’t be blamed on Brexit; we also have the general slowing of economic growth and the escalation of the US-China trade war, which are putting pressure on corporates globally.
Elsewhere in Europe the effects are very much apparent, with a 4% increase forecast for Switzerland, Italy and Belgium.
So, what does this mean for 2020?
According to The Gazette, corporate insolvencies are expected to increase, globally by a further 1.2% in 2020 with a further 5% increase in the rate of corporate insolvencies in the UK alone. The business environment is expected to remain challenging.
Stuart Ramsden, Head of Commercial at Atradius, UK, stated: “Businesses cannot be inhibited by this and if they want to achieve growth, must be prepared to face the challenges by protecting their business from any potential negative impact."
Gavin Pickering, our Specialist Insolvency Lawyer, says;
“Our advice is that quick action is the key to success for any creditor when faced with an insolvent customer but especially an impending administration, if they are to maximise their chances of recovery. Businesses concerned about their own viability should also seek advice promptly before it is too late to avoid insolvency. Directors are now a primary source of recovery and will need to take care and should be aware of the potential risks to them personally if their company approaches insolvency or becomes insolvent. We help our clients through all aspects of insolvency to take quick action and have a long-standing record of recovery for our clients. You can Find out more about our insolvency services and how we can help you, here.