Rise in number of UK companies entering administration | Business

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The number of firms collapsing into administration across England and Wales rose by nearly 5% to more than 1,400 last year, according to the accountancy firm KPMG.

Brexit uncertainty and economic turmoil created a particularly tough year for the building and construction industry, while the real estate and property sector also suffered, it found. The demise and ongoing restructuring of a large number of high street retailers has had a “profound” impact on commercial property income and values.

KPMG’s study of official insolvency notices posted in the London Gazette reveals that a total of 1,403 companies went into administration during 2019, up from 1,341 the previous year. It does not include high-profile corporate collapses such as that of Thomas Cook, which went straight into liquidation.

There was a particular increase in insolvencies in the third quarter of the year, during which 420 firms went into administration including the fashion brands Jack Wills and Karen Millen and the travel firms Late Rooms and York-based Super Break.

Firms deemed to be in financial distress may go into administration in an attempt to salvage themselves as a going concern or to recoup more money for creditors.

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The official annual total compiled by the government’s Insolvency Service is due to be published shortly. Its 2018 data published last April showed the highest level of company administrations in five years.

Insolvencies fell back to more typical quarterly levels in the final quarter of last year, with 311 administrations between October and December. High-profile cases included the greetings card retailer Clintons, Toto Energy, and the women’s fashion retailer Bonmarché.

In the building and construction industry there were 254 administrations, compared with 216 in 2018, including the Cheshire construction group Pochin’s. It was also a challenging year for companies in the real estate sector, with 69 administrations, up from 53 in 2018, including Bolton-based Harewood Associates.

Blair Nimmo, the head of restructuring at KPMG UK, said: “2019 was a year characterised by profound political and economic uncertainty, with consumer confidence remaining fragile and companies continuing to bear the brunt of rising overheads and increased costs. While many battened down the financial hatches, adopting a prudent and cautious strategy, for some, the challenging trading conditions proved to be a bridge too far.”

Nimmo said the general election result had created a positive mood which appeared to have slowed down the level of corporate collapses. “It’s certainly not apparent that we are about to see an influx of insolvencies over the months ahead,” he said. “December’s election result brought with it a degree of certainty, and business confidence seems to have responded positively.”

Only last week, however, KPMG was appointed as administrator to the department store chain Beales, threatening 1,300 jobs in the latest blow to the UK high street.


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