More companies fall victim to downturn
Jul 21 2008 by Karen Dent, The Journal
COMPANY administrations in the North East have risen by more than a third in the first half of the year as more businesses fall victim to the economic downturn.
Forty-seven companies in the North East and north and west Yorkshire, entered administration in the year to July 11, up from around 30 in the same period last year, figures published today by business rescue, recovery and restructuring specialist Begbies Traynor show.
The number of businesses entering creditors voluntary liquidation (CVL) – the standard form of liquidation – was also up by 11% to 191 in the same period.
And the number with ‘critical problems’ – CCJs of £5,000 or more and/or a winding-up petition – soared by 650% in the three months from April to June, compared to the same period last year.
An average of 28 companies a month had critical problems – which do not include administrations – compared to the monthly average of just four during the second quarter of 2007.
Andy Haslam, an administrator with Begbies Traynor in Newcastle said: “Industries are having problems across the board. No specific industry is finding it difficult, everybody is suffering. Suppliers’ costs are going up, fuel is going up, all raw materials are going up.
“People are trying to attract custom with loss leaders. The big boys can do that but the small trader can’t. Administrations, which the Government has been promoting as rescue culture, are up by 35%. If you go down an administration route rather than a CVL, you would expect administrations to go up and CVLs to come down to balance it out. But actually they are both going up. So the general trend is that more companies are finding themselves in difficulty.”
It is a trend that has hit a number of large well-established North East companies this year, including Sunderland-based furniture chain ScS, County Durham baker Tindale & Stanton and South Shields gift and book company Premier Direct.
The first two were bought as going concerns, but Premier Direct, which went into administration last month with the immediate loss of 101 jobs, is still in administration and its entire stock has been sold to discount bookseller The Works.
But the North East Chamber of Commerce said that, although the figures made grim reading, they should be viewed against the wider context of the region’s economy. A spokesman said: “While any insolvency is terribly bad new for the business owner and its employees, we need to bear in mind that these figures represent a tiny fraction of the North East business base. We have to take into account the number of new businesses coming into the economy to fully understand its impact. We appreciate that businesses are working in extremely tough economic conditions and there are some sectors that are really struggling but there are others that are thriving, particularly the export market.”
Steel structure jobs are axed
A TOTAL of 18 jobs have been axed after a business specialising in steel structures was placed into administration.
Durham Structures, which is based in Bishop Auckland and had an annual turnover of £8.7m, has retained eight of its 26 staff to oversee its office and continuing contracts.
Administrator Andy Haslam said: "This is a long established business but it has run out of work. We have tried to sell it but so far have been unsuccessful."
