Businesses need to prepare to “batten down the hatches” in the autumn as the number of insolvencies has jumped by almost half in just the first six months of the year while companies face the worst economic crisis seen in decades.
This morning threw up an immediate example of the insolvencies crisis facing global markets as London-based Russia focused gold mining firm Petropavlovsk filed for administration as it revealed it was unable to repay a $200 million (£169 million) loan.
Analysis of notices in the official journal of record The Gazette by business restructuring specialists Interpath Advisory revealed that a total of 451 companies fell into administration or receivership from January to June 2022, up from 312 during the same period last year.
Although high, this was still not back at the pre-pandemic levels of 655 in the first half of 2020 and 686 in the first six months of 2019, but flags a worrying trend across the SME and corporate world.
Building and construction, industrial manufacturing, and retail industries experienced the sharpest rises as shuttering firms is on the rise due to spiralling inflation, rising interest rates and energy costs, supply chain disruption and ongoing political uncertainty continuing to pile pressure on businesses.
Interpath said it was “certainly starting to see an uptick in activity” in its insolvency teams.
March saw the highest monthly levels of business shutdowns and receiverships since July 2020, with 101 appointments to the administrator.
Blair Nimmo, CEO of Interpath Advisory, said: “Businesses up and down the country continue to be buffeted by an array of headwinds, from inflation and interest rate rises, to supply chain disruption and staff shortages, not forgetting the war in Ukraine and now political uncertainty on the home front with the impending change in Prime Minister.”
He added that businesses were now treading a “fine line” of what sort of costs, if any, they can pass on to their customers and that with five consecutive interest rises over recent months, plus fuel and energy costs rising, “there’s no surprise that both consumers and businesses alike are thought to be preparing to batten down the hatches in the autumn”.