Businesses ‘to face rising insolvency risk over New Year’

Posted 30/11/2009

Struggling firms should not rely on the upcoming Christmas period to alleviate the danger of insolvency, according to an expert.

Andy Wood, regional chairman of insolvency body R3 in Yorkshire, told the Sheffield Star that he expects a potential “bloodbath” in the retail sector over the festive period.

He attributes this to rising levels of unemployment and depressed consumer spending, which may lead to lower levels of Christmas business than many may be hoping for.

Mr Wood therefore called on threatened businesses to seek professional advice on insolvency now, rather than setting too much stock on hopes that the economic downturn is ending.

He said: “It’s worth remembering that insolvency peaks usually happen after a recession ends.”

This echoes guidance given last month by accountancy group Tenon, which suggested that rates of corporate insolvency could continue to increase across 2010 and possibly into 2011 due to the persisting unfavourable economic conditions.