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Recession results in increase in liquidations

March 26, 2009 by admin  
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Officials from the Insolvency Service have recently reported that there was a sharp increase in the number of companies that went bust in the last three months of last year, as the recession and the global financial crisis continued to take a grip in the UK.

With banks cutting back on lending still further as a result of funding problems and tighter credit conditions, many firms found that they were unable to continue trading because of their financial situation, leading to the increase in insolvencies in the UK.

Whilst some companies have tried to restructure in order to avoid having to close their doors altogether, this has not always been successful according to one industry official who stated: ‘A number of companies and their stakeholders are trying hard to restructure their businesses, but given the speed of the downturn, it is inevitable that some will run out of cash.’

Industry officials have also predicted that whilst the figures were bad for the last quarter of last year, the situation is set to get worse over the course of this year. One of the worst affected sectors is the retail sector, and a number of major household names have already gone into administration over recent months, such as Woolworths, which has been around for decades, and Zavvi, which was part of the popular Virgin group.

Consumers have been forced to cut back on their spending on the high street and on services as a result of tighter credit conditions and financial troubles, and this has had a profound negative impact on many areas of industry, but the retail sector has been one of the major victims.

Tags: funding, year one, grip, industry, recession, credit crunch

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