The number of Midlands business failures has stayed at historically low levels, according to new figures – with Government support packages propping up the economy during the pandemic.
KPMG’s Restructuring Practice said notices posted in the London Gazette suggest 25 Midlands companies went into administration over the last three months, compared to 51 in the third quarter of 2019.
Through the first nine months of the year there were 107 administrations across the region, compared with 135 in the first three-quarters of 2019.
KMPG said it reflected a similar picture across the 海角视频, with administrations down 39 per cent in the three months to the end of September, compared to the same period in 2019, with 246 businesses entering administration.
The last time numbers were this low was in the last three months of 2015 when 243 companies went into administration.
Recent administrations include Leicestershire-based builder JA Ball, which ceased trading this month, with the loss of 18 jobs.
The Coalville contractor, which worked in the public and private sector, was founded in 1992 and specialised in refurbishments, extension work, and commercial projects – including building churches and schools. Over the years it had built several hundred homes and dozens of apartments.
A statement from business recovery and insolvency experts Smith Cooper said restrictions caused by Covid-19 had led to missed completion dates, hampering the company’s ability to meet its financial obligations.
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Nationally, despite the success of Eat Out To Help Out in August – which some fear contributed to the second wave of Covid 19 infections – the leisure and hospitality sector has been devastated by seven months of restrictions.
KPMG said 48 companies across the sector, including the Azzurri and Byron restaurant chains, entered into administration in July, August and September – 41 per cent up on the 34 seen during the previous three months.
Chris Pole, restructuring partner at KPMG in the Midlands, said: “Whilst it is encouraging to see a significant drop in the level of corporate insolvencies, unfortunately this is not a reflection of the wider financial health of businesses across the Midlands.
“The well-publicised and readily available Government support initiatives, whether that be through HMRC deferments, the furlough and job support scheme, or access to Government-backed loans, mask the underlying stress and challenges which businesses are currently facing.
“The introduction and subsequent extension of the temporary provisions for businesses under the Corporate Insolvency and Governance Act 2020, which was initially due to expire on 30 September 2020, was a welcome relief for business leaders.
“These provisions, which include a temporary moratorium against debt enforcement action, have no doubt provided extra breathing space for those businesses experiencing cash pressures despite having access to the Government’s support initiatives.
“The debt-enforcement moratorium is currently due to expire at the end of December and consequently we do not expect to see a significant rise in insolvencies across the Midlands in Q4 whilst creditors are unable to take enforcement action.
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“Business leaders should use the rest of the year to effectively review their financial projections for 2021 and where required, consider, plan and implement the restructuring options available to them.
“Waiting until the turn of the year to undertake this process will be more challenging, particularly at a time when the possibility of aggressive creditor action may be reintroduced into the mix.”