Administrations fall in second quarter, but headwinds remain in the North

Even though high profile insolvencies continue to hit the headlines, the total number of companies in Northern England entering administration during the second quarter of 2018 fell sharply, by nearly a fifth, according to new analysis from KPMG.

A study of notices in the London Gazette shows that a total of 92 Northern companies went into administration between April and June 2018, compared with 113 in the previous quarter – a fall of 19% – and 108 in the corresponding period in 2017.

National figures also showed a fall in administrations during the second quarter of this year, falling 13% from 347 to 302 companies.

However, this represented a modest increase on the 297 administrations seen during the second quarter of 2017.

David Costley-Wood, restructuring partner at KPMG in Manchester, said: “The drop in the number of administrations may come as a surprise to many who have followed the tribulations of certain well-known high street brands.

“Of course, we continue to see companies in the casual dining and retail spaces battle hard in the face of changing consumer attitudes towards spending, coupled with increased costs as a result of the living wage and business rates pressures.

“Whilst a number of chains have survived through the implementation of successful CVAs or via pre-pack administrations, inevitably there have been site closures and job losses across many parts of the country.

“The much-publicised pressures on the construction sector also continue to impact businesses up and down the supply chain, both large and small.

“On top of this, we’re seeing new sectors start to come under more acute pressure – for instance, high street estate agents are presently facing an unprecedented set of challenges.

“The rise of online-only agencies have combined with falling house prices, a general slowdown in sale activity and a raft of legislative changes, all of which have generated headwinds for the sector.

“I would, therefore, not be surprised to see operators across this sector struggle over the second half of the year and beyond.”

Mr Costley-Wood added: “Overall, however, the latest figures reflect a relatively positive picture for most businesses.

“For the most part, adopting a long-term cautious approach appears to be paying off, although sector-specific challenges and broader global economic changes will inevitably force some businesses to reconsider their operations and potentially restructure to improve efficiencies.

“For now, there is still a lot of money in circulation for companies that want to refinance their way out of trouble.

“The corporate finance market in the North West is in good health at present, and traders will be hoping it remains buoyant as we enter 2019.”