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Insolvency lawyers to deal with fallout from short-term measures

Published on 19 Jan 2010 under category: legal

Businesses experienced "high levels of corporate distress" at the end of 2009, with the slight reduction from 2008 levels attributable to short-term governmental measures, according to a new report.

Restructuring specialist Begbies Traynor found in its Red Flag Alert, a quarterly monitor of company distress, that over 140,000 companies experienced "significant and critical financial problems" at the end of 2009.

The reduction of stress by 14 per cent from the same period in 2008 was credited to major government initiatives such as quantitative easing, the 2.5% VAT decrease, and shorter-term measures including HMRC’s Business Payment Support Service.

However, the report warns that many businesses will be unable to recover after the scheme finishes and predicts that the fallout is likely to kick in from late spring this year.

Ric Traynor, executive chairman of the specialist firm, said: "Experience of the last four recessions tells us that unemployment levels and corporate and personal insolvencies have lagged behind technical recession by one to two years.

"With tax and interest rates certain to rise, as well as increasing pressure on consumer spending, there is every reason to suggest that the insolvency peaks of this recession remain some way off."

If you require advice on Insolvency and Bankruptcy please call us on +44 (0) 20 7831 0101 and ask for Katherine Sillett.