In this edition:
Buckingham Group Contracting went into administration with nearly 500 job losses. The insolvency of the £665 million turnover company, which had been trading for 36 years, was the largest failure in the construction sector since Carillion in 2018. They were involved in major sports ground projects, including building new stands at Liverpool and Fulham football clubs. They were due to start work on a new £140,000 stadium in Belfast for the Ulster Gaelic Athletic Association.
The rail engineering division was sold to Kier for £9.6 million saving around 180 jobs.
Read the full articleAllianz-Trade has published research assessing the risk of non-payment by companies in 18 trade sectors across 70 countries. The assessment is based on four key components: demand, profitability, liquidity and business environment. Each sector is then graded either high, sensitive, medium, or low. Most sectors are graded sensitive or medium with only construction falling into the high-risk sector when the scores for all countries are taken into account. There are variations across the regions, with Asia having a low risk compared to Latin America, which has a high risk.
Read the full articleYeovil-based leather *manufacturers Pittards, who make gloves for the royal family and emergency services, appointed Ernst & Young as administrators. The firm was founded in 1826 and employed 150 staff in the UK and 900 in Ethiopia. The company said that the recent pound crash, rising interest rates, and inflation had caused difficulties.
Read the full articleIn a recent publication, Atradius forecast an increase in worldwide insolvencies of 34% in 2023, driven by normalisation after the pandemic and the bankruptcy of zombie companies. Atradius expects insolvencies to continue to increase in 2024, but at a lower rate of 19%. By the end of 2024, insolvencies are expected to be back to pre-pandemic levels.
The insolvency level in the UK is high, at 140% of pre-pandemic levels. The increase is due to the end of government COVID support measures and the weak economic recovery since Brexit.
Read the full articleShares in Evergrande, the world’s most indebted company, were suspended on the Hong Kong Stock Exchange, and the chairman was put under police surveillance. Evergrande expanded rapidly by borrowing US$300 billion and is involved in 2,800 projects across China. Evergrande filed for bankruptcy protection in the US in August while it tries to arrange a debt restructuring program.
Private individuals have paid deposits for flats that have not been built and could lose out if Evergrande collapses. Suppliers, including construction and material suppliers, could also lose out. There would be a knock-on effect on China’s financial system, which could cause banks to reduce lending.
As well as being involved in construction projects, Evergrande owns companies in wealth management, electric car manufacturing, and a major football club.
Read the full articleA report by Red Flag for insolvency practitioners Begbies Traynor found there are nearly 38,000 firms in critical financial distress. The definition of critical financial distress is where a County Court Judgement of £5,000 or more is outstanding. This is a 25% increase in the last 3 months. The construction sector is the worst hit, with a 46% increase.
Over the same period, actual company insolvencies increased by 10%.
Read the full articleThere were 6,208 (seasonally adjusted) company insolvencies in England and Wales during the third quarter of 2023. This was a 2% decrease from the previous quarter (after seasonal adjustment) and an increase of 10% compared to the same period last year.
See Government press releaseIf you’d like to discuss these topics further, please do not hesitate to contact me.
