Tuesday, August 4, 2020

East Midlands business insolvency risk holds steady in 2019

The number of East Midlands companies at elevated risk of insolvency has held steady throughout 2019, with the eleven regional business sectors monitored by restructuring and insolvency trade body R3 either seeing their proportion of companies at elevated risk flattening or falling between June and July.

R3’s monthly statistics for July, compiled using Bureau Van Dijk’s Fame database, highlight that around two-in-five businesses in the region – 43.1% – are now in the elevated insolvency risk band, which is equivalent to around 93,000 companies and essentially the same as the proportion at the start of this year (43.2%).

The East Midlands sector proving to be more financially stable than the other local industries monitored by R3 is agriculture. Although its insolvency risk has increased marginally by 0.3% on last month’s figure, the number of agricultural businesses in the elevated risk band is around 800, forming the lowest proportion in the region at one-in-three (33.8%), the fourth lowest of any region in the UK.

Meanwhile, the East Midlands manufacturing sector is outperforming the UK average, with over one in three businesses (36.9%) at greater than normal risk of insolvency, below the national average of 37.8%.

R3 Midlands Chair Eddie Williams, a partner at Grant Thornton in Leicester, said: “It is good to see insolvency risk stabilising in the East Midlands and a glimmer of positivity for the local business community. However, sizeable challenges still remain.

“Throughout 2019, local companies have faced a raft of challenges, including preparations for Brexit, the National Living Wage, exchange rate fluctuations and increases in rent and rates. The R3 research highlights the importance of planning for such eventualities and monitoring company finances carefully.

“The key to business survival is to take relevant professional advice at the first sign of significant financial difficulties. When R3’s members are called in to help early enough, much can be done to rescue and support businesses beyond traditional insolvency solutions.”

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