Rise in corporate insolvencies 'when, not if', R3 member survey finds

Garry Lee - Chair R3 Southern  Thames Valley Committee
Garry Lee - Chair R3 Southern Thames Valley Committee

Results of a survey show that corporate insolvencies are expected to hit home the hardest in October to December of 2020, according to the R3 trade body for Hampshire.


R3 – the association for insolvency and restructuring professionals – made the finding when it carried out a survey of members.


The results showed:

•    An overwhelming majority (93.7%) of respondents expect corporate insolvency numbers to increase over the next year


•    More than half of respondents (56.1%) expect corporate insolvency numbers to be significantly higher than in 2019, while more than a third (37.6%) think they will be somewhat higher.


•    Out of those who said they expect numbers to rise:
o    nearly six out of ten (56%) think the increase will happen in October to December 2020
o    More than a quarter (26.3%) expect the increase to occur in January to March of 2021
o    Just 16% think corporate insolvency numbers will increase in July to September 2020  


Respondents pinpointed pubs/bars, restaurants and tourism operators as those most likely to be worst affected followed by hotels and retailers.
The results came despite demand for corporate insolvency procedures decreasing in April and May compared to previous months, while enquiries were mainly about eligibility for state-provided relief packages.


R3 Southern & Thames Valley chair Garry Lee, who is an associate director in the recovery and restructuring services team at accountancy firm Smith and Williamson, said: “It’s clear from the results of this survey that it’s a question of when, not if, corporate insolvency numbers increase.


“This is because the support available to businesses has deferred rather than deterred the rise in corporate insolvencies you would expect to see in an economic climate like this.”


Garry added: “We would urge anyone who is concerned about the future of their business to seek advice from a regulated insolvency professional as early as possible.


“Doing so will give them more options about their next step and allow them to make a more considered decision about how they move forward.”


Respondents felt the main triggers for corporate insolvency advice over the next 12 months would be rent payments or arrears (61.7%), trade debts (49.7%), tax payments or arrears (48.1%), and wage payments (35.5%).
When asked which of the Government measures they would describe as ‘very effective’, seven in ten (70.5%) named the Coronavirus Job Retention Scheme, nearly half (45.9%) said tax payment deferrals, and more than a third (35%) named the business rates holidays.


Southern & Thames Valley region includes Berkshire, Bucks, Hampshire and Oxfordshire.


Visit the R3 website at https://www.r3.org.uk/ for more details and commentary about the results of the survey.

Bookmark and Share
All content ©2010 The Business (Dorset) Ltd www.bizmag.co.uk
Website designed and managed by WhitesandsPR www.whitesandspr.com