News

The number of distressed UK businesses has more than doubled since the start of the year, according to Begbies Traynor, the UK's leading business rescue, recovery and restructuring specialist.

* More than twice as many companies experiencing 'critical problems' since the start of 2008
* UK business feeling effects of ongoing economic turmoil
* IT, manufacturing, rental services and property services sectors showing highest increases

A staggering 4566 companies faced 'critical' problems (those with CCJs totalling over £5,000 or Winding-Up Petition related actions) in the third quarter of 2008 compared with only 791 in the same period last year.

Additionally, the number of companies with 'significant' problems (those with a court action and/or average, poor, very poor or insolvent or out dated accounts) has nearly doubled from January to the end of September, to 58,564.

In both cases, the September figures for companies in trouble are at their highest this year. Companies on the 'critical problems' list increased from 736 in January to 1798 in September - a rise of nearly 250 per cent.

Ric Traynor, Executive Chairman of Begbies Traynor Group, commented, "Our latest Red Flag Alert Statistics reveal September was the worst month yet for UK businesses. The effects of recent market volatility, coupled with the second year effects of the credit crunch conditions, have clearly taken their toll. With twice as many companies now experiencing 'significant' problems, we expect to see an even further increase in 'critical' business problems as distress escalates over the next year."

"The recent events in the banking sector herald a return to days gone by - much tighter credit terms and businesses needing a stronger case to convince bankers to support them. Stricter lending criteria and the inability to secure funding mean many businesses which might have relied on additional credit to see them through a temporary downturn no longer have that option. Unfortunately, the advent of stricter lending criteria comes at precisely the time when the trading prospects for UK companies are deteriorating rapidly, and when the extreme level of market uncertainty makes writing business plans to support funding options extremely challenging."
 

Source - Begbies Traynor