Troubled firms rise by 81%
THE number of distressed companies in the North-east and Yorkshire facing collapse leapt by 81% last year, according to a leading restructuring specialist.
Begbies Traynor’s Red Flag Alert showed companies showing early signs of financial stress averaged 5,501 per month during the last quarter of 2008.
More than 16,500 North-east firms showed significant problems - up 41% on the same period in 2007.
A total of 551 companies in the region faced ‘critical’ problems (those with CCJs totalling over £5,000 or winding-up petition related actions within the past three months) in the fourth quarter of 2008 - an 81% increase compared with 306 in the same period the year before.
Construction, property and retail sectors were hit hardest with 3,241 companies in the North-east experiencing significant problems, but the professional services, IT and telecoms sectors also saw dramatic increases.
Simon Lundy of Begbies Traynor in Newcastle said: “The numbers make grim reading and show the extent to which the downturn is reaching more and more industry sectors, but compared with the rest of the country the region has seen fewer companies with problems than the national average.”
He said many lenders were “effectively closed for new business, which obviously increases the risk of insolvency over 2009”.
Andy Haslam, also of the firm’s Newcastle office added: “We are now starting to see the first signs of a positive investment trend of business angels and trade buyers becoming more active in taking the opportunity to acquire companies or assets at depressed prices.”
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