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Current insolvency trends

The numbers of corporate insolvencies are falling.  At the time of writing my current estimate for 2014 is 33,000 corporate insolvencies which is about 75% of the peak reached in 2009.

Interest rates are not now expected to rise until 2016 and UK GDP growth is not expected to fall dramatically.  Neither economic factor is therefore likely to reverse the downward corporate insolvency trend.

Some industries are facing challenges: oil and gas production and distribution started 2015 with uncomfortably low commodity prices; and the new year has started, as usual, with some retail insolvencies. The financial sector has not been immune from major shocks, with the Swiss National Bank’s removal of the Euro cap causing distress in the foreign exchange industry.

Uncertainties will continue in 2015, increasing the risk of insolvency as a result of factors such as the General Election, continuing economic weakness in Europe, tensions in the Middle East, the risk of financial collapse in Russia and, of course, unforeseen events.

Nevertheless, in my view UK insolvency practitioners will be best advised to explore the wider reaches of their skill sets, rather than expecting to sustain a business purely undertaking insolvency work.  At Mercer & Hole, not only do we seek to avoid formal  insolvency and promote constructive use of insolvency procedures, but also we have established a number of niches, such as European cross-border restructuring, working on distressed authorised financial services businesses, acting where estates have interest rate hedging product mis-selling claims and undertaking expert witness work in relation to insolvency practice.

 

 

Date: 5th February, 2015
Author: Chris Laughton

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