High proportion of East Midlands businesses at risk of insolvency

Last month we had some good news from the Insolvency Service, which showed a sharp drop of 15.4% in underlying corporate insolvencies in the second quarter of 2017.

However, behind that encouraging number lies a more distressing trend. Creditors beware, because, according to trade body R3, more East Midlands businesses are standing at the brink of insolvency than at any other time this year.

This Midlands branch of restructuring and insolvency trade body R3 shows that over one in four businesses in the region – 28 per cent – are now at higher than normal risk of becoming insolvent.

R3’s August figures, compiled using Bureau Van Dijk’s Fame database, highlight that this is equivalent to over 57,400 East Midlands companies and is in contrast to January’s figure, which was four points lower at 24 per cent or just over 47,500 local businesses.

Of the key East Midlands business sectors monitored by R3 – which include manufacturing, retail, construction, agriculture, professional services, pubs, hotels and restaurants – technology and IT was the only sector to register a decrease in insolvency risk in August.

Technology and IT, however, continues to be the highest risk sector surveyed by R3 in the East Midlands, with nearly four in ten – 38.2 per cent – of businesses at above average risk of insolvency. The East Midlands also has a higher proportion of technology and IT companies with an elevated risk of insolvency than any other region in the UK.

Tech firms are an interesting case in point. Usually young companies, fast growth can come with its own pitfalls, and over-trading, as we’ve seen time and time again, can be the downfall of many firms within the first three years of their lifetime.

If you’re concerned about late payments from any of your creditors in this sector, please do get in touch.

If you need Debt Recovery assistance, Rothera Sharp have the team for you. Call our solicitors on 0800 088 6280 or email enquiries@rotherasharp.co.uk

Terhi Sygrove - Rothera Sharp Solicitors, Nottingham