Corporate Insolvencies Double - Quarter Four 2008 ResultsCorporate insolvencies double - quarter four 2008 results
McTear Williams & Wood, East Anglia’s largest business rescue and insolvency practice, has confirmed that the economic downturn is hitting local businesses. The firm’s business index, which monitors corporate insolvencies in East Anglia, shows that there has been a marked increase in company failures.
Number of insolvent companies
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2007
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Cambs
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Norfolk
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Suffolk
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Total
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|
|
|
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|
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Qtr 4
|
14
|
16
|
14
|
44
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|
|
|
|
|
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2008
|
|
|
|
|
|
|
|
|
|
|
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Qtr 3
|
15
|
22
|
16
|
53
|
|
Qtr 4
|
29
|
28
|
21
|
78
|
|
|
|
|
|
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Increase on previous quarter
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47%
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MW-W.com Q4 2008 Index – 217
MW-W.com Q3 2007 Index – 100
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Data: All corporate insolvencies except compulsory liquidations as advertised in Stubbs Gazette and the public notices in the principal local newspapers.
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The MW-W.com index has risen from 100 in quarter three 2007 - the base line for the index - to 217 in quarter four 2008. This means that corporate insolvencies have more than doubled in just over a year.
The number of corporate insolvencies in quarter four is up 77% on the same period a year ago and 47% on the previous quarter. All three counties have recorded marked increases, most notably in Cambridgeshire where the numbers have doubled, mirroring McTear Williams & Wood’s own increase in new enquiry rates since autumn 2008. The early indications are that this trend will continue for at least the first half of this year.
Thus far the hardest hit sectors have been those related to the housing and retail markets but it is now clear that the downturn is becoming more widespread. A good illustration of this is that local employment lawyers are reporting that they are having to work flat out advising businesses on making redundancies.
There is much talk of finance being both scarce and more expensive. However, as Andrew McTear points out, from his firm’s experience the biggest danger for small and medium sized companies is a significant reduction in sales and shrinking order books. He says: “Most business only have two to three months visibility on future sales and therefore get little notice of an impending crisis. If as a business manager you find yourself in this position you do not have to face it on your own. Talk to your existing advisors or a local rescue/insolvency specialist direct.”
Where will the MW-W.com index stand in three to six months time? McTear Williams & Wood state that it is certainly set in an upward direction. Mr McTear adds: “Even if the current government stimulus is successful and the underlying causes of the downturn ease, the damage currently inflicted on balance sheets seems likely to result in more business failures than we have seen so far.”
The firm recommends that companies take early action to avoid becoming an insolvency statistic. It’s free “ten top tips for surviving the credit crunch” is available here.