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Will retail insolvencies start the year - again?

"Retail insolvencies start the year" was one of Insolvency Blog's first posts of 2007.
It's hardly surprising to see retail administrations at this time of year - over-leveraged and under-performing retailers have minimum borrowings after the Christmas sales peak and secured creditors will naturally choose that point to stop the losses.
. . . constructive use of formal insolvency . . . can often add value when a business is saleable and the right restructuring team is brought in early enough.
Paul's comment on the retail sector was:
I think the consumer has the last word on who survives - if they wish for identikit high streets, or doughnut towns, or McDonalds bacon sandwiches, so be it.
History seems to be repeating itself. The Sunday Telegraph notes here this week that:
  • Insolvency experts are on standby amid fears several high street retailers could collapse in January
  • Consumers turn to sub-prime lenders as credit squeeze bites
  • Footwear and clothing retailers have been particularly badly hit by the downturn in consumer confidence
Consumer confidence will be the biggest factor in retail business distress for the next few months, and with the weak housing market and a generally cooling economy there is cause for concern.

But the way to address business stress is, as it was a year ago:
  • take advice early
  • ask a situational expert
  • don't panic!
Happy New Year!

 

 

Date: 2nd January, 2008
Author: Chris Laughton

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