The number of U.K. companies collapsing has fallen to pre-credit-crisis levels
Deloitte’s analysis, which examined all U.K. administration figures, showed that 510 companies went into administration in the second quarter of 2010, 18% fewer than in the first quarter of the year.
In the first six months of 2010, a total of 1,065 companies entered administration—43% lower than the comparable period last year and actually 25% fewer than in the first half of 2006, which was the last full year before the financial downturn began.
Lee Manning, reorganization-services partner at Deloitte, said companies and lenders’ proactive management of financial problems has been one of the drivers behind the drop in administrations.
“By acting sooner, companies have been able to remedy problems more effectively. Equally, lenders have been supportive, preferring to make debt-for-equity swaps or even advance suitably priced risk capital, rather than crystallize their debt through an insolvency process,” Mr. Manning said.
Deloitte’s analysis shows the pronounced decrease in administrations is showing across all sectors: 81 retailers fell into administration in the first half of 2010, down 57% from a year earlier; 229 property and construction companies failed in the first half of 2010, down 43%; and 167 manufacturing companies were placed in administration, 46% fewer than a year earlier.
“We are seeing a steady decline in administrations and this is certainly a positive sign that the climate is stabilizing,” Mr. Manning said. “I would be very surprised if administration levels increased dramatically this year; rather I would expect the second half to mirror the levels of activity we’ve seen in the first half.”
Author: Chris Slay
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