Jump in West corporate insolvencies

CORPORATE insolvencies across the South West jumped nearly 30% in the first quarter of 2022 as a series of compounding crises – from inflation and supply chain disruption to the impact of the conflict in Ukraine and the pandemic – placed ever-increasing pressure on businesses.

A total of 22 companies fell into administration from January to March – up from 17 companies in the same period in 2021 – according to analysis of notices on public records site The Gazette by financial advisory firm Interpath Advisory.

Administrations, which typically involve medium-to-large businesses, are still yet to return to pre-pandemic levels, Interpath said, while liquidations (predominantly smaller businesses) are back to levels seen before the pandemic.

Lee Swinerd, director at Interpath Advisory and head of the firm’s Bristol team, said sanctions imposed on Russian banks, companies and individuals following the invasion of Ukraine had “prompted” a number of UK-based financial services firms, such as Sova Capital and VTB Capital, to enter insolvency proceedings.

“It is likely that we’ll soon see the impact broaden beyond banking,” he said. “Consumer-facing sectors, for instance, are bound to come under pressure given the impact of rising energy and petrol prices on disposable incomes. Food prices will also come under the spotlight, given Ukraine’s position as the leading global exporter of sunflower oil, and the fifth largest wheat exporter.”

The construction, industrial manufacturing, leisure and hospitality and retail sectors saw the highest number of firms appointing administrators and insolvency practitioners over the period.

However, there were also increases in the number of insolvency appointments in the transport and logistics and fast-moving consumer goods sectors (FMCG), including food and drink firms.

In the first quarter of the year, there were twice as many filings for insolvency (13 appointments) in the FMCG sector.

Sarah Collins, managing director at Interpath Advisory, the rising number of insolvencies was “not surprising when you consider the vast array of issues and pressures that organisations are facing – spiralling inflation, the conflict in Ukraine, supply chain disruption, the impact of the pandemic, staff shortages, as well as trading difficulties arising from Brexit.

“Dealing with one or two of these issues at any one time is tricky enough, but to have all land at once is testing even the most brilliant of management teams.”