Member Article

North East Insolvency Numbers Spike After Challenging Month

A turbulent month for the North East economy saw the number of insolvency-related activities in the region last month hit its highest point in almost a year.

According to analysis by insolvency and restructuring trade body R3 of new data provided by CreditSafe, there were a total of 87 liquidator appointments, administrator appointments and creditors’ meetings in the North East during February, which is a 48% increase from the 59 recorded in January.

The number of insolvency-related activities across the region has hovered around the 60 mark through each of the last six months.

But with a number of well-known North East firms hitting trouble in February, the monthly figure has now climbed to its highest point since the last of the government’s temporary insolvency protections were removed at the start of April 2022.

It is also around 20% higher than the 74 insolvency-related activities registered in February last year.

On the positive side, new year momentum in the regional start-up sector has been maintained, with 1,356 new businesses being set up in the North East during February, just behind the numbers recorded for January this year and February 2022.

R3’s analysis of the CreditSafe data also found that North East businesses had more than 161,800 invoices on their books in February that had gone past their payment deadline without the money being received, while over 12,700 regional firms had invoices outstanding that should already have been settled.

North East chair of R3 Chris Ferguson, who is head of recovery & insolvency at Gosforth-based RMT Accountants & Business Advisors, says: “The first quarter of any year is traditionally the hardest for businesses in many industry sectors, including retail, leisure and hospitality, and the headlines were sadly full of bad news for some well-known North East names last month.

“There is often a knock-on effect for smaller firms in the supply chain where larger businesses fail, and while it has been good to see many of the SMEs impacted by the insolvency of key clients being able to pick up work elsewhere, there will undoubtedly be others that haven’t been able to do so.

“It’s encouraging to see the number of North East start-ups remaining robust in the face of continuing economic challenges, but the enduring regional situation around late payment of invoices remains a concern, especially as the impact this has on supplier cash flow, which can sometimes be the final straw for struggling businesses.

“Any businesses that are facing financial difficulties need to seek out qualified advice as early as they can, so that they retain access to the widest possible range of potential solutions that will provide the best possible chance of them resolving their financial issues.”

This was posted in Bdaily's Members' News section by Julian Christopher .