Insolvencies in North West soared by a third last year

The number of North West companies entering administration increased by a third in 2019, according to new research.

Analysis of notices in the London Gazette  by KPMG shows that 283 North West businesses went into administration in 2019, compared to 213 in the previous year.

The increase is significantly higher than national levels, where a five per cent rise in insolvencies was recorded.

The final quarter of the year saw business administrations in the North West fall by 16 per cent compared to the previous quarter, with 72 administrations between October and December.

Notable cases in 2019 across the region included the administration of Pochin, Bolton Wanderers Football Club, Bentley Harrington (the publisher of Unilad), LateRooms and Total Polyfilm.

Rick Harrison, restructuring partner at KPMG in Manchester, said:“2019 was a year characterised by profound political and economic uncertainty, with consumer confidence remaining fragile and companies continuing to bear the brunt of rising overheads and increased costs.

“While many businesses across the region battened down the financial hatches, adopting a prudent and cautious strategy, for some, the challenging trading conditions proved to be a bridge too far.

“Despite the jump in North West insolvencies in 2019, the softening in the final quarter of the year was good to see.

“While certain sector-specific challenges remain, we would encourage companies to continue to focus on good financial housekeeping. Keep a tight grip on cash and costs, focus on operational efficiencies and maintain clear visibility over supply chains, where unforeseen events can have a significant knock-on impact on business.”

On a national level, the number of companies falling into administration totalled 1,403 businesses, compared with 1,341 in the previous year.

The rise was driven by a spike in insolvencies in the third quarter of the year, during which 420 firms went into administration including the likes of Jack Wills, Karen Millen, Late Rooms, and Eversmart Energy.

It was a tougher year for those in the building and construction industry, which saw 254 administrations, compared to 216 in 2018. It was also a challenging year for companies across the UK real estate sector, which saw 69 administrations, up from 53 in 2018, with continuing pressure on activity levels and margins.

Rick Harrison said:“It’s certainly no surprise that we have seen an increase in real estate and construction insolvencies over the past 12 months, particularly when you consider two specific drivers of activity.

“Firstly, companies exposed to residential property development and investment were significantly affected by the geo-political and economic uncertainty, that has impacted consumer confidence and demand.  And secondly, the demise and ongoing restructuring of a large number of high street retailers continues to have a profound impact on commercial property income and values.

“Capital-constrained landlords will need to adapt to the structural changes affecting the sector, which on some sites will require substantial investment to implement repurposing strategies.

“This is a trend we are likely to see continue well into 2020, as the full impact of retailers’ store closure and estate rationalisation programmes take effect.”