The latest PwC analysis into corporate insolvency numbers
demonstrates that the effect of the downturn on Midlands business
is showing more signs of easing.
In the West Midlands, the number of insolvencies fell to 403,
down 18.6% on the previous quarter and 31.5% on the same quarter
last year. London continues to have the highest number of
insolvencies with 869 but compared to the same quarter in 2009,
shows a marked improvement with a 21% decrease. All regions have
seen drops in the number of insolvencies, with the most improvement
being seen in the North East and Cumbria where the number of
insolvencies have dropped by 30% since the last quarter.
Rob Hunt, partner in the business recovery services practice at
PWC in the Midlands, commented:
"The reduction in insolvencies reflects the expectation and hope
that more favourable conditions will return and a viewpoint that
alternative options to insolvency need to be considered.
"In the Midlands, we are seeing a fall in the number of
administrations as businesses are starting to look at other options
before insolvency is used as a last resort. Financial
restructuring, company voluntary arrangements and schemes of
arrangement are now being used as businesses are now starting to
realise that the sooner problems are identified, the quicker a
solution can be found."
Nationally, 3,467 companies became insolvent in the second
quarter of 2010. This represents a big 21% decrease on the previous
quarter and a promising 28% decrease in comparison to the same
quarter of 2009. Even on a rolling twelve month basis, the numbers
show an 11% decrease in insolvencies.
The worst affected sectors continue to include Construction (555
companies), Manufacturing (421), Retail (342) and Real Estate
(150). There has been a marked improvement across all these
sectors, apart from real estate where there was a 3% increase in
insolvencies since the last quarter. However, all these sectors
show a marked improvement when compared to the same quarter of
2009. Construction has seen a decrease in insolvencies of 24%, 36%
in Manufacturing, a big decrease of 37% in retail and a 34%
decrease in Real Estate.
Rob Hunt, partner, summarised: "The actual insolvency
statistics show only part of the picture. There are many
restructurings either not involving insolvency or using light touch
insolvency techniques to salvage viable businesses. Those
businesses most likely to survive the recession will turn to
management teams and advisors experienced in turnarounds. They will
plan for different scenarios and they will be obsessive over their
cashflow management."