LONDON: Corporate insolvencies in Britain went up 11 per cent in 2005 and experts attributed the cause to slowdown in consumer spending, high energy costs and high prevalence of red tape.
Financial data firm Experian, which carried out a study, said there were 18,122 corporate bankruptcies, the highest number since 2002. The firm believes the number is poised to go up in 2006. In the fourth quarter of 2005, there were 4,501 insolvencies, an increase of 7 per cent over the corresponding period in 2004.
Retail and business service companies were the hardest hit, the survey indicated. "The financial landscape for U.K. companies had already begun to change by the start of 2005 as rising interest rates, the consumer slowdown and increased red tape all took their toll,'' said Richard Lloyd, managing director of Experian's Business Information unit.
The survey covered 34 industries and 25 of them recorded an increase in business failures. While non-food retailing saw a 40 per cent increase in bankruptcies, diversified industrials companies had a 19 per cent rise. These, along with business services firms, media businesses and construction accounted for more than 33 per cent of all failures.
Northeast England saw failures increase 59 per cent to 462 cases, while Wales, the City of London and Scotland recorded declines compared with the year ago period.
Experian said one of the typical cases in that of Unwins Wine Group Ltd., a British liquor-store operator owned by DM Private Equity. The company collapsed in December after its principal lender put it in administration. Unwins has been facing competition from supermarket chains. Other failed companies include LDV, Tiles R Us, MVC and Canterbury Foods.
Experian based its findings on the adverse notices received from Companies House suggesting that a company has little or no chance of recovering to a normal status in the future. The notices include voluntary liquidations, compulsory liquidations, administration orders, receiverships and voluntary arrangements. Voluntary and compulsory liquidations accounted for 80 per cent of all company failures during the year.
Posted
on : Fri, 06 Jan 2006 14:15 GMT | Debt News
By : Mike Lawson
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