Administrations soar in first quarter in fragile recovery

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Corporate administrations in England and Wales increased by 22% in the first quarter of 2011 versus Q4 2010, insolvency statistics reveal.

Manufacturing, which was previously leading the way to recovery, has had a significant increase in administrations by 45%. This trend is reflected across all sectors. Overall, the pressures UK PLC has borne are now seen to be taking their toll.

Commenting on the figures David Hudson, partner at Baker Tilly Restructuring and Recovery, said: “The increases for Q1 are not surprising. Historically, this has been a tough quarter for businesses. However, companies that have used credit arrangements to continue to trade through 2010 are now nearing the end of their arrangements and their performance may not have been sufficient to continue to trade without extending or rearranging new agreements with their creditors and lenders.

“HMRC is declining reapplications from companies that previously have entered into Time To Pay (TTP) arrangements. However, HMRC will still consider first time requests subject to meeting the relevant criteria.

“Looking ahead though, the recovery remains fragile. Evidence businesses can service any current and, in some cases, additional debt requirements it takes on will be top of the agenda for lenders and stakeholders.”

Baker Tilly Q1 2011 administration statistics showed businesses in the South East (excluding London) and East Anglia of England are under increasing pressure, with the regions suffering from an acceleration of administrations over the past year at 32% and 41% respectively.

The latest figures show the construction, leisure and retail sectors continue to be hard hit and this trend is likely to continue due to the current economic conditions.